LONDON – Oil prices edged up Monday morning on the back of mounting threats between the United States and Saudi Arabia over the suspected killing of a dissident Saudi journalist.
Brent crude, the global benchmark, was up 0.9 percent to $81.11 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.5 percent at $71.71 a barrel.
“Growing tensions over the disappearance of journalist Jamal Khashoggi at the Saudi consulate in Istanbul have proved supportive for oil prices,” according to Warren Patterson, commodities strategist at ING Bank.
President Trump said the US would impose “severe punishment” on Riyadh if an investigation implicates the Saudi government in the case of Khashoggi, who disappeared after he entered the Saudi consulate in Istanbul on Oct. 2.
Turkish officials have said they have audio and video recordings purporting to show that Khashoggi was killed inside the consulate.
On Sunday, the Saudis vowed to retaliate against any punitive measures from Washington, while noting that the world’s largest exporter of crude oil “plays an impactful and active role in the global economy.”
“This has raised concerns that the Saudis may use oil as a tool for retaliation if any sanctions or other action is taken against them as a result of the disappearance of the journalist,” Patterson said.
The tit-for-tat threats between the US and the Saudis are “giving rise to new uncertainty for the oil market,” according the analysts at Commerzbank.
The oil market had come under pressure last week amid a global stock market rout, as well as downward revisions in oil demand growth projections for this year and next by both the Organization of the Petroleum Exporting Countries and the International Energy Agency.
Brent on Friday closed down $3.37 a barrel lower week-on-week.
Among refined products Monday, Nymex reformulated gasoline blendstock – the benchmark gasoline contract –was up 0.4 percent at $1.94 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $713.50 a metric ton, mainly on a par with the previous settlement.