Crude oil futures crept higher in European morning trading Monday, as the market weighed the continuing fall-out of the disappearance of Saudi journalist Jamal Khashoggi on relations between Saudi Arabia, the US and the countries’ other trading partners.
At 1108 GMT, the December ICE Brent crude futures contract was up 20 cents at $79.98/b, while the NYMEX November light sweet crude contract was 14 cents higher at $69.26/b.
Last week, Saudi Arabia said Khashoggi had been accidentally killed in the Saudi consulate in Istanbul, and subsequently arrested 18 unidentified Saudis and other government officials, amid international pressure. Over the weekend, Turkish president Recep Tayyip Erdogan stepped deeper into the fray, announcing he would release further details of Khashoggi’s death on Tuesday.
“The Saudi version of events throws up more questions than it answers,” Commerzbank analysts said in a morning note. “Thus the international pressure on the Saudi leadership remains in place, as does the possibility of sanctions.”
Market analysts were closely watching for further responses from US president Donald Trump, who has wavered in his response to earlier denials from Saudi Arabia that the journalist was murdered in the consulate.
For the moment, the twists and turns of the Khashoggi disappearance appear to be outweighing the long-term focus on the fall-out of the official start of US sanctions on Iran, which begin next month, which some market analysts say is now priced in. However, any retaliation by Saudi Arabia in the form of cuts to oil output would further tighten global markets.
“This is obviously something new for the market to focus on,” said George Wilkes, an analyst at Sucden in London. “Whether or not this gets resolved before the sanctions [begin] will be interesting to see.”
In other market news, the market was awaiting further signals on US oil stocks this week, after Baker Hughes data showed the US oil rig count rose by four to 873 for the week ended October 19. That was despite market expectations that domestic rigs would fall for that week.
Weekly figures from the American Petroleum Institute will be released on Tuesday, followed by the more definitive figures from the US Energy Information Administration. Platts
