An oil price surge after a breakdown in diplomatic ties between Saudi Arabia and Iran was short-lived due to weak economic data from some of Asia's largest economies. But as Grace Pascoe reports there are concerns the dispute could have an impact on the global economy.
Diplomatic relations between Saudi Arabia and Iran were cut after protestors attacked the Saudi embassy in Tehran. They were angry about the execution of a Shia cleric in Sunni-controlled Saudi Arabia. Iran insists no international conventions were broken. Hossein Jaberi Ansari is the Republic's Foreign Ministry spokesman. (SOUNDBITE) (Farsi) IRANIAN FOREIGN MINISTRY SPOKESMAN, HOSSEIN JABERI ANSARI, SAYING: "The Islamic Republic of Iran has taken measures to fulfil its legal commitment duties... But since Saudi Arabia sees not only its interests, but its survival in the continuation of tensions, it's used this issue as another excuse to increase tension and conflict." The tensions sent oil prices up for a few hours on fears over supply. The gains were short-lived thanks to stuttering Asian economies. But investors, who had been looking forward to the full lifting of sanctions in Iran, are now wary. Jasper Lawler is from CMC Markets. (SOUNDBITE) (English) CMC MARKETS, MARKET ANALYST, JASPER LAWLER, SAYING: "Saudi Arabia is a bigger friend to western nations than Iran - typically seen as more a foe. Politically the west are going to have to align themselves probably with Saudi Arabia. It will be difficult to on one hand politically be denouncing actions from Iran, but on the other hand increasing the level of business done there. So there are still definitely a lot of opportunities once these sanctions get lifted." Uncertainty is the word of the day With oil likely to remain a sticking point. One new poll predicts Brent crude will average 52 dollars per barrel in 2016