Oil surges after Saudi King’s death
OIL prices surged Friday following the death of Saudi Arabia’s King Abdullah, with investors watching to see if his successor will maintain production levels in the face of a global supply glut.
US benchmark West Texas Intermediate (WTI) for March delivery soared as much as 3.1 percent in New York after the Saudi royal court announced the death.
Oil prices have more than halved since the middle of last year, dragged down by an oversupply of crude in the face of weak global demand.
Saudi Arabia, the world’s top oil exporter, added to the slide when it led OPEC’s decision to keep the cartel’s production quota unchanged at a meeting in November.
In midday Asian trade on Friday, WTI for March delivery was up 84 cents, or 1.81 percent, at $47.15 a barrel. Brent crude for March jumped 87 cents, or 1.79 percent, to $49.39.
“The market is probably uncertain over what the new king would do about this over supply issue,” said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
“The market was just pricing this uncertainty,” he told AFP.
Oil prices tumbled on Thursday after news the European Central Bank launched a vast bond-buying programme aimed at kickstarting the eurozone economy. The news pushed down the euro, making dollar-priced oil relatively more expensive.
King Abdullah bin Abdulaziz is replaced by Crown Prince Salman, the royal court said in a statement after his death on Friday.
Analysts said the focus will turn to whether Salman, 79, keeps Ali al-Naimi as the country’s oil minister — a position he has held since 1995.
“This is the OPEC’s biggest producer we are talking about here,” said David Lennox, a resource analyst at Fat Prophets in Sydney.
“People will want to know more about the intentions of the successor to the throne,” he told AFP.
Michael McCarthy, chief market strategist at CMC Markets in Sydney, said he expects a smooth transition as the new king has already been making key executive decisions on oil and gas affairs.