Oil prices surged further on Monday as the global energy market grappled with mounting political uncertainty in major oil-producing nations. Speculation arose following reports of a helicopter crash carrying Iranian President Ebrahim Raisi, while Saudi Crown Prince Mohammed bin Salman’s abrupt cancellation of a Japan trip citing the health condition of King Salman added to the geopolitical tensions.
Brent crude edged up by 0.4 percent to reach $84.30 a barrel, marking its highest level since May 10. Meanwhile, US West Texas Intermediate crude (WTI) saw a modest rise of 5 cents to settle at $80.11 a barrel, briefly touching $80.23 earlier in the day, its highest since May 1.
The helicopter carrying Iranian President Raisi crashed on Sunday, according to Iranian officials, raising concerns about the fate of Raisi and Foreign Minister Hossein Amirabdollahian amidst harsh weather conditions. Meanwhile, Saudi Arabia’s state news agency reported that King Salman, aged 88, will undergo treatment for lung inflammation, prompting Crown Prince Mohammed bin Salman to delay his scheduled visit to Japan.
Tony Sycamore, an analyst at IG Markets, highlighted the heightened uncertainty in the energy markets, especially with concerns over the missing Iranian President and the health issues faced by King Salman. He suggested that WTI prices might rally further towards $83.50, buoyed by recent Chinese property measures aimed at stimulating economic activity.
Despite the geopolitical turmoil, oil prices exhibited only marginal fluctuations. Warren Patterson, head of commodities strategy at ING, noted that without significant new developments, the oil market is likely to remain rangebound until clarity emerges regarding OPEC+ output policies. The Organization of the Petroleum Exporting Countries and its allies are set to convene on June 1, potentially offering insights into future production decisions.
Saul Kavonic, an energy analyst at MST Marquee, emphasized the anticipated continuity in Saudi Arabia’s energy strategy irrespective of the current health concerns surrounding King Salman. He suggested that the market and industry have grown accustomed to Crown Prince Mohammed bin Salman’s leadership in the energy sector.
Meanwhile, the United States seized the opportunity presented by the recent dip in oil prices, announcing the purchase of 3.3 million barrels of oil at $79.38 per barrel to replenish its Strategic Petroleum Reserve, following a significant drawdown in 2022.
As the global energy landscape grapples with geopolitical uncertainties and shifting dynamics, the resilience of oil prices amidst these challenges underscores the intricate interplay between political events and economic factors shaping the energy markets. With key meetings on the horizon and ongoing developments in major oil-producing nations, the trajectory of oil prices remains subject to a delicate balance of supply, demand, and geopolitical considerations
