Oil prices are climbing after the death of 91-year old King Abdullah of Saudi Arabia. There’s clearly a bit of uncertainty as to what happens next, but both West Texas Intermediate and Brent crude oil prices are still below $US50 per barrel.
Both Brent and WTI are currently up by 1.94% to $US49.46 and 1.85% $US47.16. But there’s no real sign yet that they’re breaking out of the new $US45-50 they have been in for a couple of weeks.
Here’s Brent in the context of the last month:
The Wall Street Journal reckons no big policy change from Abdullah’s death is likely, and they’re citing a bundle of analysts:
Saudi Arabia is protecting itself by exploiting its big advantages — huge oil reserves and low-cost crude production, said Sarah Emerson, principal of ESAI Energy LLC in Boston.
“They need to make sure they have enough market share for not just tomorrow but 2040 and 2060 and beyond to ensure longevity,” Ms. Emerson said. The Saudis embarked on this new strategy in reaction to the U.S. oil boom, and it is a new status quo that won’t change under a new king, she said…
Some investors don’t think the new Saudi king will affect the policy of the Organisation of the Petroleum Exporting Countries. “I don’t think it should have an impact on the oil price,” said Pierre Andurand, chief investment officer of $US450 million London hedge fund Andurand Capital Management LLP, whose fund posted large gains in 2014 betting on lower oil prices.