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Oil jumps after Saudi king's death amid huge market shifts
[SINGAPORE] Oil prices jumped in early Asian trading on Friday as news of the death of Saudi Arabia's King Abdullah added to uncertainty in energy markets already facing some of the biggest shifts in decades.
Abdullah died early on Friday and his brother Salman became king, the royal court in the world's top oil exporter and birthplace of Islam said in a statement carried by state television.
US benchmark WTI crude futures rose more than 2 per cent to a high of US$47.76 a barrel in early Asian trading. International benchmark Brent futures opened up almost 1.5 per cent higher at US$49.10 per barrel at 0100 GMT.
The Saudi King's death comes amid some of the biggest shifts in oil markets in decades. "The fear of the unknown is going to be supportive to crude oil prices," said John Kilduff, partner, Again Capital LLC in New York. "King Abdullah was the architect of the current strategy to keep production high and force out smaller players instead of cutting," he added.
Oil prices have more than halved since peaking in June last year as soaring supplies clash with slowing demand.
Booming US shale production has turned the United States from the world's biggest oil importer into the biggest producer, producing more than 9 million barrel per day.
To combat soaring output and falling prices, many oil exporters, such as Venezuela, wanted the 13-member Organization of the Petroleum Exporting Countries (Opec) to cut output in order to support prices and revenues.
Yet, led by Saudi Arabia, Opec announced last November it was keeping output steady at 30 million barrels per day.
Brent, which had already fallen to US$77 per barrel by the time of the Opec meeting, dropped another quarter over the next month as the market digested the fact Opec would not come to the rescue.
Opec's decision not to act, led by Saudi Arabia, was aimed at defending market share against US shale producers as well as other non-Opec exporters such as Brazil or Russia.