Oil jumps as Saudi king's death feeds market uncertainty


Brent crude futures rose to a high of US$49.80 a barrel shortly after opening before easing back to US$49.35 a barrel by 0152 GMT on news King Abdullah of Arab Saudi had died - AFP/SPA Photo.


SINGAPORE: Oil prices jumped in Asian trading on Friday as news of the death of Saudi Arabia's King Abdullah added to uncertainty in energy markets already facing some of the biggest shifts in decades.

Abdullah died early on Friday and his brother Salman became king, the royal court in the world's top oil exporter and birthplace of Islam said in a statement carried by state television.

US benchmark WTI crude futures rose more than 2% to a high of US$47.76 a barrel, but had eased back to US$47.09 by 0135 GMT.

International Brent crude futures rose to a high of US$49.80 a barrel shortly after opening before easing back to US$49.35 a barrel by 0152 GMT, up 1.71%.

"The fear of the unknown is going to be supportive to crude oil prices," said John Kilduff, partner, Again Capital LLC in New York.

"King Abdullah was the architect of the current strategy to keep production high and force out smaller players instead of cutting," he added.

Kilduff also said that the new king was known as a defender of Saudi Arabia's interests and that the market would expect him to keep production high.

The Saudi King's death comes amid some of the biggest shifts in oil markets in decades.

Oil prices have more than halved since peaking in June last year as soaring supplies clash with cooling demand, due to economic slowdown in Europe and Asia as well as improvements in energy efficiency, made during times of high prices.

Booming US shale production has turned the US from the world's biggest oil importer into the biggest producer, producing more than 9 million barrels per day.

To combat soaring output and falling prices, many oil exporters, such as Venezuela, wanted the 13-member Organisation of the Petroleum Exporting Countries (Opec) to cut output in order to support prices and revenues.

Yet, led by Saudi Arabia, Opec announced last November it was keeping output steady at 30 million barrels per day.

Brent, which had already fallen to US$77 per barrel by the time of the Opec meeting, dropped another quarter over the next month as the market digested the fact Opec would not come to the rescue.

Opec's decision not to act, led by Saudi Arabia, was aimed at defending market share against US shale producers as well as other non-Opec exporters such as Brazil or Russia. – Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3

   

Did you find this article insightful?

Yes
No

Next In Business News

Facial recognition tech to be rolled out at KLIA
Chipmakers, tech stocks rally as KLCI slumps
Southeast Asia's Grab considering U.S. IPO this year -sources
Malaysia's c.bank seen cutting key rate as coronavirus forces fresh lockdowns
Lii Henn’s 875 workers under quarantine until Jan 29
SCGM unit operating at 50% capacity after 2 workers had Covid-19
Bursa Securities queries Genetec over share price surge
OCBC Bank expects BNM to cut OPR to 1.5%
KLCI extends slide over morning session
Asia shares pare losses as China economy rebounds

Stories You'll Enjoy