Oil traded near the highest level in more than two years as political upheaval in top crude exporter Saudi Arabia reverberated through a market where prices were already elevated by signs of tightening supply.
Investors have piled into oil as a shake-up of the ruling elite in OPEC’s biggest producer was seen to consolidate power with Crown Prince Mohammed bin Salman, who backs extending the group’s output cuts aimed at clearing a global glut. The purge also raised concern over instability in the kingdom, supporting a geopolitical-risk premium on crude that’s emerged with heightened tensions surrounding nations such as Iraq and Iran.
Oil’s gained more than 20 percent since the beginning of September on signs global supplies are tightening and the Organization of Petroleum Exporting Countries and its allies may prolong their output deal past March. Fighting between the Iraqi government and Kurdish forces over a disputed oil-rich region had also boosted prices. The past weekend’s arrests in Saudi Arabia eliminated potential rivals to Prince Mohammed.
“One out of nine of barrels in the world is produced out of Saudi Arabia, so whatever happens in Saudi Arabia is really a revolution or turmoil for the world of oil,” Paolo Scaroni, vice-chairman of NM Rothschild & Sons and former chief executive officer of Italian oil giant Eni SpA, said on Bloomberg Television. “With this additional uncertainty of what happened in Saudi Arabia over the weekend, prices spiked up.”
more at: https://www.bloomberg.com/news/articles/2017-11-07/oil-holds-near-two-year-high-on-prospect-of-deeper-saudi-arrests