23rd January 2015
Oil prices jumped this morning on news that King Abdullah of Saudi Arabia had died.
A barrel of Brent crude oil increased to a high of $49.80 before falling back slightly to $49.30 this morning.
Abdullah’s half-brother Salman bin Abdulaziz will succeed Abdullah as king of the biggest producer in the Organization of Petroleum Exporting Countries (OPEC). Abdullah (pictured) died aged 90 after a bout of pneumonia.
The change comes at a difficult time for oil markets, where a glut of oil produced by OPEC combined with greater domestic production in the US and a slowdown in demand in China, has seen oil prices halve since August.
Mark Keenan of French bank Societe Generale told Reuters the spike in prices would not last.
‘This little spike in prices is understandable. But this is a selling opportunity in our view. It should be sold off quickly and it won’t last long at all,’ he said.
‘When King Salman was still crown price, he very recently spoke on behalf of the king, and we see no change in energy policy whatsoever.’
Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co told Bloomberg: ‘I wouldn’t expect a change in policy in the near term to be known, but the passing comes at a challenging time for Saudi Arabia.’