The new 2016 started with hot news from the Middle East. On January 2, the Saudi government carried out a mass execution of 47 extremists. The public reacted most acutely to the execution of Shiite cleric Nimr al-Nimr, and the move signalled a start to the division of the Arabian world. A wave of unrest swept through Saudi Arabia, Iran, Bahrain, and Libya.
Last weekend, the Saudi Arabian authorities cut diplomatic ties with Iran, which has been its major regional rival.
Meanwhile, when tensions in the Middle East are escalating, oil traders start putting more geopolitical premium in oil prices. Despite the oversupply of crude, the prices went higher on Monday in response to the global developments.
During Monday trading, Brent crude was priced at $38.16 per barrel, a mid-December high. Analysts say that $39 per barrel is a technically significant level, and a break above this level is likely to take prices higher.
In general, it was not a successful start to a year for the global markets. During the first business day of 2016, the Chinese stocks tumbled by 5% followed by a trading halt. The US stock indices dropped by around 1.5%.
