Oil prices fear after Saudi attack

Fears about rising oil prices resurfaced today following the hostage-taking crisis in Saudi Arabia.

Analysts said prices could climb this week as the killing of 22 civilians in oil-rich Khobar at the weekend raises concerns about oil supplies from the world’s top crude exporter.

The global economy “would undoubtedly suffer” if US light crude resumed its climb towards 50 US dollars a barrel, against its current level of just under 40 dollars, they said.

While stock markets in the UK and US were closed today for public holidays, a number of Asian markets including the Japanese Nikkei moved lower overnight amid the concerns.

Equity markets in London and New York are also expected to face pressure later this week.

The Organisation of Petroleum Exporting Countries (Opec), which meets this Thursday, said it plans to raise output to limit price gains.

The oil cartel’s president, Purnomo Yusgiantoro – who is also Indonesia’s oil minister – reportedly told journalists in Jakarta that Opec expects Saudi to be able to raise output because it is currently producing at 85% of current capacity.

A trader at City stockbroking group deal4free.com, Paul Webb, said Thursday’s Opec summit would be closely watched, primarily to see how Saudi Arabia reacts to the current situation.

“If US light crude does resume its climb towards 50 US dollars a barrel, the global economy will undoubtedly suffer,” Mr Webb said.