The Brent oil barrel rose on Monday at the ICE Futures London stock exchange to $ 62.46, the highest level since July 2015, after Crown Prince Muhammad bin Salman of Saudi Arabia took steps to strengthen his power by setting up an anti-corruption committee, which has decided to arrest senior officials and businessmen, reports Reuters. Saudi Arabia is the largest crude oil exporter in the world.
At the New York Mercantile Exchange (Nymex), the light sweet crude oil barrel rose to $ 57.13, up 2.7% from last week’s close.
Al Arabiya television station announced on Saturday the establishment of a new anti-corruption committee headed by Prince Mohammed, who has decided to arrest 11 princes, four current ministers and dozens of former ministers as well as important businessmen. However, some local investors could eventually welcome the prospect that Prince Mohammed would increase his power and reduce uncertainties about his authority. Economic reforms, such as privatization and project development, could take place more quickly.
Although purging is a shocking political move in Saudi Arabia, it would not immediately change the oil policy of the country. The Riad authorities seem to have decided to observe their OPEC commitments next year and to go ahead with the sale of Aramco, analysts at RBC Capital Markets said.
Among the reforms announced by Prince Mohammed is Saudi Aramco’s listing next year in a deal that could generate $ 100 billion if Saudi Aramco is valued at about $ 2 trillion, as hoped by the Saudi officials.
Recently, oil producers outside the Organization of Petroleum Exporting Countries have decided to join OPEC in extending the period of crude oil production cut until March 2018, according to Agerpres.
In December 2016, OPEC member countries and 11 non-cartel producing countries agreed to cut their combined production by 1.8 million barrels per day (bpd) in the first half of 2017. Last Thursday, at the Vienna meeting, it was established that the combined production between June 2017 and March 2018 to be reduced by 1.8 million barrels per day.
OPEC’s oil production cut allowed the oil price to rise above the $ 50 barrel. But the price increase has also led to an increase in shale oil production in US, a country that does not participate in talks to reduce crude oil supply, and this slows the process of rebalancing the market.