(Reuters) – Wall Street was set to open higher on Wednesday, with shares of energy companies getting a boost from surging oil prices after President Donald Trump decided to pull the United States out of a nuclear deal with Iran.

Oil rose more than 3 percent to 3-1/2 year highs after Trump announced the “highest level” of economic sanctions against the OPEC member, casting uncertainty over global oil supplies.

Shares of oil majors Exxon (XOM.N) and Chevron (CVX.N) were up more than 1 percent in premarket trading.

The S&P energy index .SPNY closed up 0.78 percent on Tuesday, as Wall Street was whipsawed by conflicting reports on Trump’s decision, ahead of the official announcement.

“While (energy sector) is providing near-term support for U.S. indexes, I wonder whether it will help in the longer-term, with the decision potentially increasing geopolitical risk,” Craig Erlam, senior market analyst at OANDA in London, wrote in a note.

The U.S. 10-year Treasury yield US10YT=RR rose to a two-week high back above the key 3 percent level. Analysts said expectations for higher interest rates continued to drive bond yields higher, overshadowing any fallout from the U.S. exit from the Iran nuclear deal for now. [US/]

Investors are keeping a close watch on inflation, after the U.S. Federal Reserve’s favored gauge hit its 2 percent target.

The latest Labor Department report showed U.S. producer prices rose less-than-expected in April, held down by a moderation in the cost of both goods and services.

At 8:44 a.m. ET, Dow e-minis 1YMc1 were up 102 points, or 0.42 percent. S&P 500 e-minis ESc1 were up 9 points, or 0.34 percent and Nasdaq 100 e-minis NQc1 were up 14.75 points, or 0.22 percent.

Walmart (WMT.N) fell 4.9 percent after it acquired a controlling stake in Indian homegrown e-commerce firm Flipkart for about $16 billion, the U.S. retailer’s biggest foreign investment.

Match Group (MTCH.O) rose 5.7 percent after the Tinder-owner beat analysts’ estimates for quarterly revenue and profit as it attracted more subscribers to its dating apps and websites.Walt Disney (DIS.N) dipped 0.6 percent. The media company, which is in the process of buying film and TV assets from Twenty-First Century Fox (FOXA.O), reported quarterly profit that topped Wall Street forecasts.

Source: Reuters

Photo: REUTERS/Brendan McDermid