Oil prices hit two year high after Saudi purge

The price of oil hit its highest level in more than two years yesterday as investors reacted to Saudi Arabia’s latest anti-corruption crackdown, which targeted some of the kingdom’s richest businessmen.

The price of Brent Crude hit a session peak of $62.90, its highest since July 2015, after Saudi Crown Prince Mohammed bin Salman tightened his grip on power with the arrest of royals, ministers and investors including prominent billionaire Alwaleed bin Talal and the powerful head of the National Guard, Prince Miteb bin Abdullah.

Analysts “do not see Saudi Arabia, the world’s largest oil exporter, changing its policy of boosting crude prices” for now, Reuters says, especially given plans to list parts of state-owned oil company Saudi Aramco next year, with a higher oil price seen as beneficial for its market capitalisation.

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Bin Salman, who is leading a reforming agenda that aims to diversify the Saudi economy away from its dependence on oil, has already been outspoken in support of the production cuts of around 1.8 million barrels per day introduced by the Opec oil cartel last November.

These cuts, supported by fellow major oil exporter Russia, are expected to be extended at the next formal meeting of the cartel in Vienna at the end of the month, meaning prices will continue to hover around the $60-a-barrel mark, “hitting drivers and intensifying the inflation threat facing the UK”, says the London Evening Standard.

The paper says the Bank of England is “monitoring the oil price closely” as its latest inflation report forecast that rising global prices would feed through to petrol prices “relatively quickly”, pushing its Consumer Prices Index benchmark above the 3% mark later this month.