Oil prices have hit their highest levels since July 2015 on Monday as markets tightened, while Saudi Arabia’s crown prince cemented his power over the weekend through an anti-corruption crackdown, that included high profile arrests.
Brent futures, the international benchmark for oil prices, hit $62.44 per barrel early on Monday, their highest level since July 2015. Brent was at $62.27 per barrel at 02:30 GMT, up 20 cents, or 0.3 percent from the last close and 40 percent above June’s 2017 lows
U.S. West Texas Intermediate (WTI) crude hit $56.00 per barrel in early trading, its highest since July 2015, and was at $55.79, up 15 cents, or 0.3 percent from the last settlement. WTI is a third above its 2017 lows.
There may be a ‘Game of Thrones’ in Saudi Arabia now and that has big implications for the oil market.
Crown Prince Mohammed bin Salman, also known as MBS, has tightened his grip on power through an anti-corruption purge by arresting royals, ministers and investors including the prominent billionaire Al-Waleed bin Talal and the head of the National Guard, Prince Miteb bin Abdullah.
The so-called corruption crackdown in Saudi Arabia over the weekend may be the beginning of a bigger power struggle by the apparent heir to the throne which destabilizes the region for some time and keeps oil prices elevated.
History shows that when there is turmoil within Saudi Arabia, oil prices increase. If the young prince is ultimately trying to fight extremism, there could be protests led by clerics among the population.
RBC Capital Markets said in a note that although the “purge represents a stunning political development in Saudi Arabia,” it expected “no immediate changes” in the oil policy of Saudi Arabia, which is the world’s biggest exporter of crude oil.