TEXAS CITY, Texas -- Crude oil rose to a three-week high after the death of Saudi Arabia's King Fahd, ruler of the world's largest oil exporter. Prices were also bolstered following the closure of a BP Plc refinery unit in Texas, according to a Bloomberg report.
The Saudi throne, held by Fahd for 23 years, will pass to his half-brother, Abdullah bin Abdulaziz al-Saud, Saudi State Television said. The Crown Prince has been running the kingdom's day-to-day affairs since 1995, when Fahd suffered a stroke. Since then, Saudi Arabia has increased oil output [image-nocss] to compensate for reduced flows from other producers, including Iraq in 2003.
"The market got a bit jittery after the news of the King's death, Robert Montefusco, a broker at Sucden U.K. Ltd. in London, told Bloomberg. Still, Saudi Arabia has "been saying it's the same policy going forward. The market will be looking more at refinery problems or supply issues.
Crude for September delivery rose as much as 66 cents, or 1.1%, to $61.23 a barrel on the New York Mercantile Exchange, its highest since July 13 and within $1 of a record $62.10, reached on July 7.
Oil climbed 3.3% last week on concern that U.S. refiners will struggle to produce enough fuels such as gasoline and diesel as heating requirements increase, sending demand to its yearly peak during the fourth quarter. BP's Texas City, Texas, refinery had an explosion on July 28, which shut three processing units, the second incident at the plant since March.
Gasoline for September delivery rose as much as 2.14 cents, or 1.2%, to $1.7475 a gallon on Nymex, after reaching a record $1.86 a gallon on July 8.
Other analysts including Jason Kenney of ING Financial Markets said the King's death may bolster prices.
This is going to give long-term support to the oil market because Saudi Arabia is going to enter a period of uncertainty, ING's Kenney said from Edinburgh. King Fahd was on of the most important U.S. allies in the Middle East, especially for oil policy. The politics of the region are going to be in question.
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