Oil prices rise because of tensions in Arabia, but demand outlook worsens

BEIJING (Reuters) – Crude oil futures have risen sharply on Monday, as geopolitical tensions over the disappearance of a prominent Saudi journalist are worrisome for supply, although worries about prospects for Long-term demand has weighed on prices.

Crude markets were also buoyed by data showing that South Korea was not importing Iranian oil in September for the first time in six years, before US sanctions against the Middle East country took effect in November.

Brent rose 98 cents, or 1.22 percent, to $ 81.41 a barrel, at 12 hours 124 GMT, on its way to its biggest daily gain since Oct. 9.

US crude futures rose 80 cents, or 1.12 percent, to $ 72.15 a barrel, extending gains they made on Friday after heavy losses Wednesday and Thursday.

"The market has again raised concerns over geopolitical tensions in the Middle East after the United States and Saudi Arabia have exchanged comments on the disappearance of the Saudi journalist, which has resulted in higher prices" , writes Wang Xiao, head of crude research at Guotai Junan Futures. a research note.

Saudi Arabia has been under pressure since Jamal Khashoggi, a prominent Riyadh critic and US resident, disappeared on October 2 after visiting Saudi Arabia's consulate in Istanbul.

The kingdom will retaliate against possible economic sanctions taken by other states, the official SPA news agency reported on Sunday, citing an official source.

Meanwhile, South Korea has stopped importing Iranian oil for the first time in years.

"South Korea's decision to stop Iranian oil imports gives the market absolute confidence in prices," said Chen Kai, research manager at Shengda Futures, futures broker.

Persistent geopolitical concerns, trade concerns and weaker economic prospects could pave the way for another week of unstable negotiations, Chen said, adding that Monday's price recovery was "fragile".

Pressuring oil prices, the International Energy Agency, the Western energy watchdog, said in its monthly report that the market appeared "sufficiently supplied for the moment" and had Reduces expectations for growth in global oil demand this year and the following year.

This comes after the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC) said last week that the group believes the oil market is also well supplied and that it feared creating an overabundance next year.