The oil price rose over 3% Monday and remains well bid among investors, Tuesday. The Monday surge was driven by news of a political purge by the Saudi crown prince, exacerbated by rising tensions elsewhere.
The price of Brent crude oil rose to $64.27 per barrel Monday, although it has fallen to just below the $64 per barrel, Tuesday.
WTI crude oil, meanwhile, also moved higher, hitting $57.35 per barrel, before edging a little lower.
Geopolitics replaces supply dynamics, as main oil price driver
The price of oil had more recently been driven by supply and demand dynamics. The price of oil rose above $60 per barrel, following high compliance to the agreed output cap between OPEC and major non-OPEC producers.
Growing anticipation of an extension to the output cap, based on comments from a number of key people has also supported the oil price rise.
Now, however, geopolitical tensions have taken over as the main driver, pushing the oil price even higher.
The Saudi Crown Prince, Mohammad Bin Salman, coordinated the arrest of a number of princes and ministers, on corruption charges. Unease grew, after a rocket was fired from Yemen towards Saudi Arabia.
Ongoing supply issues in Iraq and news from the Nigerian oil minister, that they would be willing to adhere to the output cap, also added to the tone of higher oil prices.
November OPEC meeting still closely eyed
Amid the ongoing global, political issues, investors are also still awaiting the next OPEC meeting, later in November.
OPEC and some non-OPEC members will attend discussions, which are set to include the potential extension of the output cap. It’s thought the Saudi crown Prince will support keeping the cap in place, as higher oil prices are required for his economic plans.
Indeed, some analysts suggest the oil price could still head even closer towards the $70 per barrel level, rather than retreat back to $50.