- Oil continues to rise as Saudi Arabia political tensions grow.
- Kingdom's ruling class has purged what it says are corrupt officials who seek to undermine the country.
- Saudi Arabia is the world's second largest oil producer so disruption in the country can have a big impact on global oil markets.
LONDON — The price of oil rose to highs not seen in at least two years on Tuesday as investors weighed the ongoing political purge occurring in Saudi Arabia, the world's second largest oil producer.
Brent crude oil, the international benchmark, passed above $64 per barrel late on Monday, and continues to rise during early European trade on Tuesday, gaining a further 0.47% to trade at $64.40 as of around 8.45 a.m. GMT (3.45 a.m. ET).
"Brent Crude continued to be the main driver of growth this Tuesday, with little else to challenge it in terms of market-swaying power," Connor Campbell, analyst at Spreadex said in an email on Tuesday morning.
"The black stuff has now crossed $64 per barrel, as commodity investors continue to rub their hands in glee at the potentially disruptive political purge currently underway in Saudi Arabia."
Here's the chart:
Dozens of people have been detained in the crackdown, which has consolidated Crown Prince Mohammed bin Salman’s power. Billionaire Prince Alwaleed bin Talal, Saudi Arabia's best-known international investor, is also being held, officials said at the weekend.
The kingdom then started to freeze bank accounts of those captured in the purge, according to a report from Reuters.
The purge gained a prominent supporter late on Monday after US President Trump tweeted about the incident.
"I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing," he tweeted.
"Some of those they are harshly treating have been 'milking' their country for years!"
The crackdown comes as plans for Saudi Arabia's economic reform programme accelerate, with the jewel in the crown — the public listing of state oil company Saudi Aramco — fast approaching.
As the world's second largest producer of oil, and the de facto head of the oil cartel OPEC, any possible disruption to production in the Kingdom would likely have a huge impact on the global balance of supply and demand for the commodity.