Oil prices fell more than one per cent yesterday after Saudi Arabia’s de facto leader said war with Iran would destroy the world economy and hinted instead at a non-military solution.

Washington, Riyadh, Berlin, London and Paris blame Iran for attacks that damaged the Saudi oil sector on September 14 and forced the world’s largest crude exporter to sharply reduce production.

Stock markets were mostly higher as traders tracked the latest twists and turns regarding the US-China trade war. The dollar was mixed against main rivals.

“In terms of geopolitical concerns, common sense is prevailing for now in Saudi Arabia,” noted analyst Naeem Aslam at traders ThinkMarkets, in reference to the comments by Saudi Arabia’s crown prince in an interview with CBS show “60 minutes” broadcast over the weekend.

Iran’s oil minister  on Sunday ordered his country’s energy sector to be on high alert to the threat of “physical and cyber” attacks.

On the stock markets, investors appeared cautiously optimistic about an easing of tensions in the US-China trade war, with prices on Wall Street opening higher and the blue-chip indices in Germany and France also in positive territory.

But analysts said investors would probably remain cautious for the time being.

“The Sino-US trade negotiations have been full of twists and turns,” said analyst Zhang Gang.

“You don’t know what remarks Trump would make in the next seven days, or what variables there will be from the US. So (investors) have set themselves in a low-key, waiting position.”