Amid US-Saudi Arabia tensions, oil prices rise

6 years ago - Published in Commodities

Crude oil futures rose on Monday as geopolitical tensions over the disappearance of a prominent Saudi journalist stoked worries about supply, although concerns about the long-term outlook for demand dragged on prices.

Crude markets were also supported in the wake of data that showed South Korea did not import any oil from Iran in September for the first time in six years, before U.S. sanctions against the Middle Eastern country take effect in November.

Brent crude had risen 98 cents, or 1.22 percent, to 81.41 a barrel by 0710 GMT, on track for its biggest daily gain since Oct. 9.

Last week’s losses for oil were linked to a two-day selloff across global stock markets, with questions over economic strength in the U.S. and globally, and eventual energy consumption. Stock futures were once again tilting lower on Monday, as Asian stocks generally sagged.

In an interview on Sunday, U.S. President Donald Trump threatened “severe punishment” if an investigation finds the kingdom in any way involved in the disappearance of dissident Saudi journalist Jamal Khashoggi, who was last seen entering the Saudi consulate in Istanbul on Oct. 2.

Firing back, Riyadh vowed even stronger retaliation against any moves from Washington, adding that the nation “plays an effective and active role in the global economy.” In addition, an editorial by Saudi-owned Al Arabiya channel’s general manager Turki Aldakhil on Sunday warned that any sanctions imposed on the country could push oil prices to $100, $200 or even double that amount.

Putting downward pressure on oil prices, the International Energy Agency, the West’s energy watchdog, said in its monthly report that the market looked “adequately supplied for now” and trimmed its forecasts for world oil demand growth this year and next.

That comes after the secretary general of the Organization of the Petroleum Exporting Countries (OPEC) last week said the group sees the oil market as well supplied and that it was wary of creating a glut next year.