NEW DELHI: The oil prices extended gains on Monday amidst
political uncertainty
in key oil-producing nations. The sudden death of
Iran
‘s president
Ebrahim Raisi
, the country’s foreign minister, and several other officials after their helicopter crashed in the country’s northwest and the cancellation of
Saudi Arabia
‘s crown prince’s trip to Japan, citing the king’s health concerns, fueled the market’s unease.
Brent gained 41 cents, or 0.5%, to $84.39 a barrel by 0632 GMT, after rising to $84.43 earlier, its highest since May 10. Meanwhile, U.S. West Texas Intermediate (WTI) crude for June rose 23 cents to $80.29 a barrel, touching $80.35 earlier, its peak since May 1. The June contract is set to expire on Tuesday, with the more-active July contract trading at $79.89, up 31 cents, or 0.4%.
At one side, Raisi’s death had already upset the world and on the other side Saudi Arabian Crown Prince Mohammed bin Salman postponed his scheduled visit to Japan due to his father King Salman’s health issues, according to Japan’s Chief Cabinet Secretary Yoshimasa Hayashi. This has raised the concerns.
The 88-year-old King Salman is expected to undergo treatment for lung inflammation, as reported by Saudi Arabia’s state news agency.
“If the father’s health is failing, it adds to the layer of uncertainty already circling energy markets this morning following the news that the Iranian President is missing,” IG Markets analyst Tony Sycamore said.
He added that WTI prices may rebound further toward $83.50 after rising above the 200-day moving average of $80.02.
“I do think there are enough reasons out there for this to happen, more so when you factor in China property measures announced last week, including relaxing mortgage rules, lowering deposits, and buying unsold homes,” Sycamore said.
Despite the geopolitical turbulence, oil prices experienced only marginal fluctuations. Warren Patterson, head of commodities strategy at ING, noted that the oil market remains largely rangebound, awaiting clarity on OPEC+ output policy, with a scheduled meeting on June 1.
Saul Kavonic, an energy analyst at MST Marquee, expressed confidence in the continuity of Saudi strategy in the energy sector, irrespective of the crown prince’s health issues. Meanwhile, in the United States, Washington capitalized on the recent dip in oil prices, announcing the purchase of 3.3 million barrels of oil at $79.38 a barrel to replenish its Strategic Petroleum Reserve, following a significant sale from the stockpile in 2022.
(With inputs from agencies)
