Oil prices climb amid uncertainty over Iran president’s fate, Saudi King’s health

Oil prices continued to rise on Monday, driven by political uncertainty in major producing countries. Concerns emerged after a helicopter carrying Iran’s president crashed, and the Saudi crown prince canceled his trip to Japan due to the king’s health issues.

Brent crude climbed 32 cents, or 0.4%, reaching $84.30 a barrel by 0240 GMT, its highest level since May 10. Meanwhile, U.S. West Texas Intermediate (WTI) crude edged up 5 cents to $80.11 a barrel, after peaking earlier at $80.23, the highest since May 1.

Iranian officials confirmed that a helicopter with President Ebrahim Raisi on board crashed on Sunday. An Iranian official reported on Monday that hopes were fading for the survival of Raisi and Foreign Minister Hossein Amirabdollahian after search teams found the wreckage in rugged terrain and icy conditions.

In a separate incident, Saudi Arabian Crown Prince Mohammed bin Salman postponed his visit to Japan, scheduled for Monday, due to King Salman’s health issues, according to Japan’s Chief Cabinet Secretary Yoshimasa Hayashi. The 88-year-old king is being treated for lung inflammation, reported Saudi Arabia’s state news agency on Sunday.

IG Markets analyst Tony Sycamore noted that these developments added to the uncertainty in energy markets, suggesting that WTI prices could further rebound towards $83.50, especially after surpassing the 200-day moving average of $80.02. Sycamore also pointed to recent Chinese property measures, such as relaxing mortgage rules and buying unsold homes, as additional factors supporting oil prices.

Brent crude ended the previous week with a 1% gain, marking its first weekly increase in three weeks, while WTI rose by 2%, buoyed by improved economic indicators from the U.S. and China, the world’s largest oil consumers.

Despite regional volatility, oil prices remained relatively stable. Warren Patterson, head of commodities strategy at ING, remarked that the oil market remains rangebound and may need a clear direction on OPEC+ output policy to break out of this range. OPEC+ is set to meet on June 1.

Patterson also noted that the market’s response to geopolitical developments has been muted, likely due to OPEC’s substantial spare capacity. Energy analyst Saul Kavonic from MST Marquee added that the industry has grown accustomed to Crown Prince Mohammed bin Salman’s leadership, and continuity in Saudi strategy is expected despite the king’s health issues.

In the United States, the recent drop in oil prices allowed Washington to purchase 3.3 million barrels at $79.38 a barrel to help replenish its Strategic Petroleum Reserve after significant sales in 2022. Last week, easing inflation signs in the U.S. boosted expectations of interest rate cuts, potentially lowering the dollar’s value and making oil cheaper for holders of other currencies.