NEW YORK (Reuters) - Crude oil prices rose to 3-1/2-year highs on Wednesday following President Donald Trump’s decision to withdraw the United States from a nuclear deal with Iran, a move that helped lift equity markets as Exxon Mobil, Chevron and other oil majors rallied.
Contracts for Brent, the global crude benchmark, and for the U.S. benchmark jumped almost 3 percent to highs last seen in November 2014 after Trump on Tuesday abandoned the deal and announced the “highest level” of sanctions against Iran.
Trump’s move raises the risk of conflict in the Middle East and casts uncertainty over oil supplies in an already tight market.
U.S. crude CLcv1 rose $1.95 to $71.01 per barrel and Brent LCOcv1 was last at $77.09, up $2.24.
The energy sector in equity markets rallied, helping lift European stocks, a gauge of world equity performance and the broad U.S. market on Wall Street.
“It’s the clear leader today. It’s overwhelming almost all the other sectors in terms of its impact on today’s market action,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
While crude oil prices have rallied over the past 12 months, energy stocks have basically gone nowhere, which is helping their gains on Wednesday, Arone said.
“Now we’re starting to see that gap close, so this could be a bit of a short-term rally for the energy sector,” he said.
MSCI’s gauge of equity performance in 47 countries .MIWD00000PUS gained 0.25 percent, with Exxon and BP the second- and third-largest contributors.
Energy added the most points to the pan-European