Oil prices spiked following the death on Friday of Saudi Arabia’s King Abdullah, whose country’s oil production is the largest of any state in the 12-member Organization of Petroleum Exporting Countries (OPEC), a cartel responsible for approximately 40% of the global oil supply.
The monarch’s passing also increased oil futures in New York by 3.1 and London by 2.6, according to Bloomberg. As the globe’s biggest exporter of crude oil, Saudi Arabia helped maintain an OPEC production quota last year that helped keep oil prices low by ensuring a high supply of crude in the worldwide market. Prices nearly halved last year when OPEC’s output did not drop to reflect oversupply, as the U.S., the globe’s largest consumer of oil, pumped more oil than it had in over three decades.
“The passing of King Abdullah is going to increase uncertainty and increase volatility in oil prices in the near term,” said financial analyst Neil Beveridge in a phone interview with Bloomberg.
U.S. crude stockpiles jumped by 10.1 million barrels, its largest volume increase since early 2001, according to the Energy Information Administration’s reports up to Jan. 16.
Crown Prince Salman bin Abdulaziz succeeds King Abdullah, who helmed the kingdom for nearly a decade and significantly enlarged Saudi Arabia’s economy, which is now the largest in the Arab world in terms of total GDP.