Bloomberg is reporting that Oil prices jumped after the death of King Abdullah of Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries. The Saudi King was reported dead this morning and speculations are already rife regarding the direction of the price of oil.
Futures rallied as much as 3.1 percent in New York and 2.6 percent in London after the Saudi royal court announced the death in a statement. Crown Prince Salman bin Abdulaziz will succeed Abdullah on the throne.
Why the speculation?
Saudi Arabia is the world’s largest crude oil exporter and was crucial to OPEC’s decision to maintail its oil production quota despite calls for a cut. The decision has helped send oil prices to below $50 just over two months after OPEC’s last meeting. Whilst speculations suggest that a policy change might be imminent others have asserted that the new King, Crown Prince Salman bin Abdulaziz, is even a hardliner and will not push for any policy change. Saudi has maintained it is ready to see Oil prices drop even more provided it shuts out shale oil producers in the US, a move it believes will help maintain market share on the long run.
West Texas Intermediate for March delivery climbed as much as $1.45 to $47.76 a barrel in electronic trading on the New York Mercantile Exchange and was at $47.11 at 3:03 p.m. Singapore time. The contract dropped $1.47 to $46.31 on Thursday. Total volume was about 47 percent above the 100-day average. Prices have decreased 3.3 percent this week.
Brent for March settlement advanced as much as $1.28 to $49.80 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $2.30 to WTI, compared with $1.04 on Jan. 16.