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Wednesday 29th of October 2008
August 1, 2005

Death of King Fahd causes sharp oil price increases


by Brian Turner
Death of King Fahd causes sharp oil price increases

Crude oil prices rose above $61 per barrel on Monday after Saudi Arabia reported the death of King Fahd. He will be succeeded by Crown Prince Abdullah, his half brother, who has been acting ruler since King Fahd suffered a stroke in 1995.

Because of this continuity of rule, Saudi Arabia’s oil policies are not expected to change, and most analysts believe that oil prices will not be materially affected by the king’s death in the long run.

Saudi Arabia’s long-held oil policy has been to keep the world’s markets well-supplied. Some called the rise in prices on Monday after the announcement of the king’s death “psychological” in nature.

The death of the Saudi Arabian king was not the only factor in Monday’s price hikes, with refinery problems in the United States causing more concerns that strong demands might not be able to be met.

Prices for West Texas Intermediate crude were up to $61.23 at one point during the day, but remained below the all-time high of $62.10, which was reached on July 7.

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