The price of oil may rise on speculation Saudi Arabia's admission a columnist was killed in the country's consulate in Istanbul straining ties with the US.
Saudi Arabia, the world's biggest oil exporter, said on Saturday that Jamal Khashoggi, a critic of Crown Prince Mohammed bin Salman, died after an altercation in Turkey. The explanation was questioned by many politicians in the US and leaders in Europe.
Oil rose Friday for the first time in three days after President Donald Trump promised "very severe" consequences if Khashoggi turned out to be dead.
"The issue for oil is if the Saudi explanation satisfies the US president and Congress which it evidently doesn't do completely yet," Edward Bell, commodities analyst at Emirates NBD Bank PJSC, said Sunday. "It does raise questions about the integrity of the US-Saudi relationship. The market will have a hard time answering those questions and an upward move in oil could come about."
West Texas Intermediate for November delivery rose 0.7 per cent on Friday to $69.12 a barrel on the New York Mercantile Exchange. Brent for December settlement climbed 0.6 per cent to $79.78 a barrel on the London-based ICE Futures Europe exchange.
Trump said the Saudi statement over the weekend was "a great first step. I think we're getting close to solving a very big problem."
Later, speaking to reporters in Nevada, he said it was a concern that Khashoggi's body is missing but reiterated that the writer's killing shouldn't affect broader ties with the kingdom.
Last week, Saudi Arabia threatened to use its economic clout to retaliate against any punitive measures. While it didn't make an explicit reference to oil, analysts and traders said it could be read as a veiled threat to use its energy riches as a political tool.
Saudi Arabia is "unlikely to withhold supply deliberately at this time," Barclays Capital analyst Michael Cohen said in a report on Friday. Cutting output would hurt the valuation of the planned initial public offering of state-run Saudi Aramco and "it would damage a reputation as a reliable oil supplier that Saudi Arabia has long sought to burnish," he said.