Key crude oil prices rose by 1% to their highest levels since late-2014 on Monday, pushed up by a deepening economic crisis in Venezuela and a looming decision on whether USA will re-impose sanctions against Iran. Even though Iran does not export any oil to the United States, it could on that basis reduce or potentially completely remove or at best reduce demand from U.S. allies in Europe, Japan and South Korea - just like we saw between 2012 and 2015, when Iran was sanctioned. The US President has said he will announce his decision at 1800 GMT Tuesday.
Microsoft rose 1.1 percent and Bank of America climbed 1.2 percent.
Phillip Futures' Lu said India will likely "quietly take Iranian oil from other avenues" instead.
"Markets are uncertain at the moment", Benjamin Lu, investment analyst at Phillips Futures, said.
The deepening economic crisis in Venezuela is also threatening the OPEC members already low oil supplies. Their deal was reached in 2016 and began to take effect previous year. It's output has fallen five times more than required by the OPEC-Russia supply deal, helping the cartel achieve a record level of cuts . "I think we are where we are because OPEC got their groove back", said Helima Croft, an analyst at RBC Capital Markets.
USA oil major ConocoPhillips has moved to take Caribbean assets of Venezuela's state-run PDVSA to enforce a $2 billion arbitration award, three sources told Reuters.
Oil prices hit a new high for the year as domestic production continues about 10 million barrels per day (bbl/d) and traders continue to wait for the Trump administration's decision about whether to exit the Iran nuclear deal.
In currency markets, the dollar broadly held firm on the prospect of solid US economic growth, helped partly by Trump's tax cuts and spending, pointed to further rises in USA interest rates down the road.
USA stocks closed modestly higher Monday, extending the market's gains from last week. The state oil company PDVSA "may fall into an accelerated spiral downward", he said last week.
The divergence between developed and emerging markets was also visible in equity prices. "The Dow and the S&P closed 0.4 per cent higher, whilst the Nasdaq rallied 0.8 per cent, as shares in Apple continued to cheer yesterday's Buffet news, but overall optimism was waning with some scepticism setting in".
Likewise, consumer incomes will be pinched by elevated gasoline prices.
KEEPING SCORE: The S&P 500 index rose 13 points, or 0.5 percent, to 2,677 as of 11:05 a.m. Nvidia led the sector, rising 4 percent to $248.68. The yield on the 10-year Treasury note held steady at 2.95 percent.
As a larger chunk of workers' paychecks goes to fuel, less disposable income is left to be spent elsewhere, a potential problem for an economy heavily reliant on consumer spending. Positioning is less net-short than yesterday but more net-short from last week.