Global oil prices have increased amidst supply concerns due to rising tensions between Saudi Arabia and the US over the disappearance of well-known Saudi journalist Jamal Khashoggi.
Brent crude futures, the international benchmark for oil prices, rose $1.49 per barrel to $81.92 before losing some of the gains and trading at $80.83, while US crude climbed 20 cents to stand at $71.54 a barrel, Reuters reported.
ING commodities strategist Warren Patterson was quoted by the news agency as saying: “Growing tensions over the disappearance of Saudi journalist Jamal Khashoggi at the Saudi consulate in Istanbul has proved supportive for oil prices.”
Khashoggi, a US resident and a critic of Riyadh, went missing on 2 October at the Saudi consulate in Istanbul.
International pressure is mounting on Saudi Arabia, with the UK, Germany, and France calling for an investigation into the matter.
US President Donald Trump issued threats to the kingdom that his administration will take ‘severe’ steps if the role of the Saudis in the journalist’s possible murder is established.
In response to the threats, Saudi Arabia warned that it would retaliate to any action taken against the nation, according to Reuters, which cited state news agency SPA.
Patterson added: “This has raised concerns that the Saudis may use oil as a tool for retaliation if any sanctions or other action is taken against it.”
Meanwhile, the International Energy Agency downgraded its forecasts for global oil demand growth for 2018 and 2019 and noted that the market is adequately supplied at this point. The report weighed on oil prices.
The report stated that the Organization of the Petroleum Exporting Countries (OPEC), Russia and other oil producers have ramped up output since May this year, increasing global crude production by 1.4 million barrels per day (bpd).