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MARKET REPORT: Oil hits a fresh high amid Opec squabbles 

MARKET REPORT: Oil hits a fresh high as Opec fails to sign a new production deal amid squabbles between Saudi Arabia and the UAE

Oil prices climbed to a new three-year high last night after the Opec+ cartel plunged into crisis.

Brent crude rose above $77 a barrel for the first time since late 2018 after the 23-member group of countries abandoned a crucial meeting aimed at striking a new production deal.

Opec+ states were supposed to have used the meeting to raise the amount of oil they produce. 

Brent crude rose above $77 a barrel for the first time since late 2018 after the Opec+ group of countries abandoned a crucial meeting aimed at striking a new production deal

But no deal was sealed after several days of tense talks failed to resolve an increasingly bitter spat between Saudi Arabia and the UAE.

Although the group planned to start producing more oil now that the global economy is reopening – sending demand through the roof – the agreement would also have kept certain upper limits in place until the end of 2022 to avoid flooding the market.

The UAE was not happy with this and said it was its ‘sovereign right’ to negotiate a better deal for itself so that it could pump out more of the black stuff.

Both sides refused to budge and the organisation did not even manage to agree a date for its next meeting.

Stock Watch – BATM Advanced Communications 

Investors cheered BATM Advanced Communications after it secured a £7.2million cyber-security deal with a long-standing government defence department customer.

BATM has never revealed which government it is working with, but it said the latest contract will see it provide the organisation with software and machines.

Zvi Marom, chief executive of the Israel-based group, added that the agreement is encouraging and shows business is picking up.

He said it was ‘reflective of the increasing return to normality’ of IT investment. Shares rose 4.7 per cent, or 4.3p, to 96.3p.

The limbo that Opec+ is in threatens to send oil prices even higher in the short term, which could accelerate inflation across the globe – as production will not increase in August.

The breakdown between two of OPEC’s largest players comes just as much of the world is returning to a pre-pandemic ‘normal’ and there are genuine fears there will be not be enough oil to meet rising demand.

The rise in prices sent London’s oil majors higher with BP shares up 0.9 per cent, or 2.85p, to 324.25p and Shell up 1.3 per cent, or 19.2p, to 1450.4p. 

BP and Shell’s rises helped the FTSE 100 start the week on the front foot. The index rose 0.6 per cent, or 41.64 points, to 7164.91, while the FTSE 250 hit a record high as it climbed 1.2 per cent, or 275.41 points, to 23,022.4. 

Both were also aided by reopening stocks – companies that will be back in high demand once Covid restrictions drop later this month.

Upper Crust-owner SSP rose 5 per cent, or 14.2p, to 298.2p ahead of the return to commuting, while Cineworld rose 4.3 per cent, or 3.64p, to 87.48p and shareholders in British Airways-owner IAG, hopeful that some travel constraints will relax as well, climbed 4.9 per cent, or 8.86p, to 188.98p.

Elsewhere, the frenzied dealmaking that has swept the London market showed no sign of abating. Spire Healthcare has accepted a sweetened takeover offer from Ramsay Healthcare.

The private hospital operator has urged investors to back the £1.4billion deal, which works out at 250p per share and is an increase from a 240p approach Ramsay made in May. But Spire’s shares closed below the new offer price, falling 2.8 per cent, or 7p, to 240.5p.

University halls investor GCP Student Living, on the other hand, climbed 14.3 per cent, or 24.2p, to 193.4p after confirming on Friday that it had received a bid from by a consortium led by its biggest shareholder, and the world’s largest private equity firm, Blackstone.

There were also rumours circulating on the City grapevine that buyers are circling bespoke bedroom wardrobes and kitchen maker John Lewis of Hungerford.

The company denied that there was any reason for the movement and said there had been no material development since it released its first-half figures in March.

But its shares shot up 50 per cent, or 0.5p, to 1.5p, making it the highest riser on the AIM All-Share index.

Ladbrokes-owner Entain’s efforts to buy the wagering business of Tabcorp were thwarted.

The firm, formerly known as GVC Holdings, had teamed up with private equity giant Apollo and Australian firm Betmakers to put forward a £1.9billion offer. 

But Tabcorp said it would spin the division off instead. Entain’s backers were unperturbed by the snub, with shares in the Footsie group rising 3.2 per cent, or 58p, to 1855.5p.