Oil: the United States and Saudi Arabia will not quarrel
In the beginning of the month, October 2, 2018, in the Consulate of Saudi Arabia in Istanbul lost The Washington Post journalist Jamal Khashoggi. He was known as a critic of the Saudi crown Prince Mohammed bin Salman. Whereabouts Khashoggi still do not know, this Saturday he would have celebrated 60 years.
Presumably, he was tortured and killed. Advisor to Turkish President Recep erdoğan, Yasin Aktay said that Khashoggi was eliminated by Saudi agents.
The US President Donald trump has threatened Saudi Arabia “severe punishment”. Against this background, the stock index of Saudi Arabia at the time was down 7%, bonds fell to multi-year low, while Brent crude rose 1.5%. In response, Saudi Arabia has expressed its readiness to enter a response. The opportunity they have – can sell belonging to them bonds for us $120 billion, or provoke a rise in oil prices. Given the dominant position of the Saudis in OPEC and the imminent negotiations on the extension of the current agreement to reduce the quotas (the current agreement expires at the end of the year), the opportunity.
According to CNN, in the near future, Saudi Arabia can accept murder as Khashoggi and present it as accidental. It seems that the situation will not develop along the path of stress and it softened. Donald trump after speaking with the king of Saudi Arabia has considerably softened the rhetoric that could be interpreted as unwillingness to go to tough opposition.
Michael Pompeo will soon meet with the king of Saudi Arabia. The conflict is not beneficial to either of US (as it will lead to a new round of higher oil prices), nor Saudi Arabia (more important for them to maintain their position in the region and rival for them is Shiite Iran). The Saudis remain the main strategic partner of the USA in the region. On the background of reducing tensions oil prices falls below $80 per barrel of Brent.