The Daily Star (Lebanon)
Oil sheds gains after Trump turns down heat in Saudi row
Oil surrendered most of its early gains after tensions appeared to ease between the U.S. and Saudi Arabia amid growing international outrage over the disappearance of one of the kingdom’s most prominent critics.
Futures were little changed in New York Monday after rising 2 percent as the U.S. and Saudi Arabia traded barbs over the fate of journalist Jamal Khashoggi. Trump suggested “rogue killers” may have been responsible for Khashoggi’s disappearance, dialing back a dispute that threatened to strain relations between the world’s biggest economy and its largest oil exporter.
“The market calmed when President Trump said the Saudi king had nothing to do with the missing journalist,” said Phil Flynn, senior market analyst at Price Futures Group.
Before his Monday phone conversation with Saudi King Salman Bin Abdul-Aziz, Trump had promised “severe punishment” should the kingdom be proved responsible for the Khashoggi’s disappearance in the Turkish capital. In response, the Saudis threatened to use their economic might to retaliate, which would have been a break from their decades-old policy of putting petroleum above politics.
“The market will price in some risk premium,” said Giovanni Staunovo, an analyst at UBS Group AG. “While Saudi Arabia hasn’t used politics in recent years, its crown prince – like President Trump – isn’t an ordinary politician and it’s unclear how he’ll react going forward.”
Crude has retreated 6 percent after reaching a four-year high earlier this month as a darkening demand outlook, coupled with global stockmarket routs, prompted investors to shun risky assets. Still, it’s not yet clear whether the Organization of Petroleum Exporting Countries and its partners can offset supply losses from Iran as U.S. efforts to isolate the Islamic Republic take hold.
West Texas Intermediate for November was little changed at $71.46 a barrel at 11:34 a.m. on the New York Mercantile Exchange.
Brent for December settlement rose 5 cents to $80.48 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.27 premium to WTI for the same month.
Meanwhile, gasoline futures fell 0.7 percent to $1.9289. Abu Dhabi shelved plans for an initial public offering of a 25 percent stake in Spanish oil refiner Cepsa as investors balked at the valuation amid a stock market rout.
No sooner had global oil prices rallied to four-year highs and calls for $100-a-barrel crude resounded across the energy industry, than signs of weakness began to appear from Oklahoma to the Mediterranean. – Bloomberg News
It’s unclear how the crown prince will react going forward