Brent crude climbed in pre-trading in London following the news of the death of Saudi Arabia’s King Abdullah bin Abdulaziz al-Saud in the early hours of Friday morning.
The benchmark for crude was up 1.7pc to around $49.36 per barrel as traders weighed up the possibility for political uncertainty in the world’s largest oil exporting country.
King Abdullah will be succeeded by the Crown Prince Salman bin Abdulaziz al-Saud. But the transition could bring the kingdom’s current policy of forcing down oil prices into focus.
King Abdullah was a key supporter of the kingdom’s oil minister Ali al-Naimi. His death may therefore weaken the position of this long-serving official. Mr Naimi has already faced criticised within the kingdom for allowing crude to tumble from over $100 per barrel since last summer.
The kingdom holds the largest oil reserves in the Middle East and is the world’s largest shipper of crude, pumping around 9.5m barrels per day.
However, it is thought to have 2.5m bpd of spare capacity available, which makes it the world’s only true swing producer with the ability to influence prices.

In November, Mr Naimi was instrumental in persuading the Organisation of Petroleum Exporting Countries (Opec) to keep producing at a rate of around 30m barrels per day in order to force oil prices lower and win back market share that the cartel had lost to shale oil drillers in North America.

However, the controversial strategy has hit the economies of many of the cartel’s members and drawn criticism for the kingdom, which itself depends on prices of around $100 per barrel in order to balance its books.

Without the support of King Abdullah, Mr Naimi may struggle to defend his current production policy given the strain this is already having on the kingdom’s economy and the surrounding region.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11364409/Oil-prices-climb-on-death-of-Saudi-Arabias-King-Abdullah.html