Oil Prices Climb After The Death Of Saudi Arabia’s King
Oil’s value significantly climbed after the death of King Abdullah.
Saudi Arabia is the leading oil producing nation in the Organization of Petroleum Exporting Countries.
While the country has been mourning the passing away of the leader, the news that there is a new development in oil prices brings a positive impact to oil’s status.
The futures in New York and London closed to as much as a 3 percent increase. The rally occurred after the royal court of Saudi announced the King’s death. Abdullah’s throne will be succeeded by crown prince Salman bin Abdulaziz. The leadership of Abdullah in the OPEC made the decision not to slowdown oil production among the nations despite the spiraling down of oil prices.
The king’s death marks a short period of volatility in the prices of oil as policies will be put into tight questioning without the strong leader. According to analysts, the change in policy is not to be expected in the near future.
Oil prices started to drop as of June last year and have only bounced back today.
Tension in the market
Before the crown was passed to prince Salman, he stood by his father’s rigid decision in maintaining the oil production in the OPEC. The King’s close advisor and the Kingdom’s oil minister, Ali Al-Naimi, who is behind every major oil decision since 1995 is rumored to step down of his post. This news gave tension to world market.
There is also the constant question whether Kind Abdullah’s death will increase the instability caused by insurgents across the Middle East. The presence of the King in that part of the world brought a sufficiently slight order in that seemingly chaotic region.
The OPEC’s supply of oil
It is reported that the members of the OPEC which are mostly Middle East countries supplies a collective 40 percent of the oil in the world. At their meeting in Vienna last November 27, they stood by their decision to have a total production of 30 million barrels of oil daily. In December, the group output was 30.2 million which was in line with their forecast.