Oil prices rise after Saudi king Abdulaziz’s death

Oil prices, which have been on decline in recent months, took an unexpected rise immediately after the Saudi Arabian royal court announced the death of Abdullah bin Abdulaziz, the king of the country.

As at Thursday evening, crude oil prices tumbled after the Energy Information Administration (EIA) announced the largest build in the United States (US) crude stocks in at least 14 years, CNBC reports.

US crude settled at $46.31 per barrel, down 3.1% on the day, having reached a high of $49.09 earlier in the session. Brent crude futures last traded at $48.50 a barrel, down 44 cents, off a session peak of $50.45.

However, crude oil futures in New York and London rose by 3.1% and 2.6%, respectively, on Friday.

In early Asian trading, US benchmark WTI crude futures increased by over 2% to $47.76 per barrel.

As at the time of filing this report, oil futures for March were edging closer to $50 per barrel at $49.3 per barrel.

Experts believe the rise is due to the uncertainty of the new King’s policies regarding reduction of Organisation Petroleum Exporting Countries (OPEC) supply of crude oil, which the late King insisted on not reducing.

In November 2014, Saudi Arabia blocked calls from poorer members of the OPEC oil exporter group for production cuts to arrest a slide in global prices, sending benchmark crude plunging to a fresh four-year low.

As the oil prices fell drastically in 2014, oil exporting countries requested for a reduction in supply to increase demand, hence increasing the falling prices, but Saudi Arabia declined the request.

Harry Tchilinguirian, senior oil strategist at BNP Paribas, who spoke to Reuters, said he expected no change in Saudi oil policy.

“King Salman was already involved in policy making prior to the passing of the king,” he said.

“So from that perspective, if he helped set the agenda, he will maintain that agenda.”

If King Salman, the successor of Abdulaziz, maintains the policies of his predecessor, the prices are expected to drop again to what the trend has been over the past few months.