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The New Arab Staff & Agencies

Oil prices rise amid Saudi cuts and US Capitol storming

Oil prices rose after Saudi Arabia announced cuts [Getty]

Date of publication: 7 January, 2021

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Oil rose globally amid shocking scenes in the US capital and the anticipated confirmation of Biden's election win.
Oil prices on Thursday rose globally amid the storming of the Capitol building in Washington by supporters of US President Donald Trump and cuts to production by Saudi Arabia.

Crude saw a 1 percent climb after the chaotic scenes in Washington and expected oil cuts under the new Joe Biden administration.

Brent crude gained 1.3 percent on Wednesday night, settling with a 44 cents rise, while US West Texas Intermediate (WTI) also rose to $51.14, according to Reuters.

It came as supporters of Donald Trump stormed the Capitol building as the Senate was set to confirm Biden's election win.

Although it was not clear if these unprecedented scenes contributed to a rise in oil, markets are still observing the events closely.

"I'm not sure it changes anything fundamentally but what everyone will be looking at is how the equity markets react, as well as the U.S. dollar," Matt Stanley, senior broker at Star Fuels in Dubai told Reuters.

Read also: Dollar down as Democrats close in on Senate but equities struggle

Other moves had a definite impact on the price of oil, such as Saudi Arabia's unilateral decision to cut production by 1 million barrels per day.

The cuts will take place in February and March, which comes after a meeting of OPEC members and Russia.

The US is also expected to cut crude oil production under Biden, who will enter the White House on 20 January.

"WTI crude seems poised to rise higher as the Biden administration will clamp down on U.S. crude production, the Saudis tentatively alleviated oversupply concerns with their 1-million bpd cut present, and as the dollar’s days seem numbered," Edward Moya, senior market analyst at OANDA told Reuters.
Crude stockpiling was also down by 8 million barrels as energy bills look to avoid tax bills.

After the mob was cleared from the Capitol building, Congress certified Biden's election win early Thursday morning with Trump promising an "orderly transition" after the vote.

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