Oil price surges on Saudi political purge, rise in broader geopolitical tensions

A girl carries her brother at a displaced persons camp near Sanaa Yemen

A girl carries her brother at a displaced persons camp near Sanaa Yemen

However, I believe that once the details of the tax plan are agreed upon, and its passing is a foregone conclusion, the equity rally will be over in the short- to medium-term.

The price of Brent crude oil rose to $64.27 per barrel Monday, although it has fallen to just below the $64 per barrel, Tuesday.

Last month, Saudi Aramco trimmed supplies to at least three Japanese buyers and one in South Korea by up to 10 percent across different Saudi crude grades for November loading as maintenance at oil fields reduced output. It was the buggest one-week jump since June. There's no doubt that OPEC and co. have been a major influencer of the most recent rally, but oil traders have a new political risk to consider, in the coming days and weeks.

FLOATING STORAGE: The amount of oil stored on tankers around Singapore has dropped sharply in the last months, the latest indication that OPEC-led supply cuts are successfully tightening crude markets even as U.S. exports have soared.

Hezbollah's leader said Saudi Arabia had declared war on Lebanon and his Iran-backed group, accusing Riyadh of detaining Saad al-Hariri and forcing him to resign as Lebanon's prime minister to destabilize the country.

The response from the U.S. shale industry is of great importance at the current stage.

If the cartel wants to target a higher price (which it won't officially communicate to the market), it will likely trigger a new wave of U.S. shale production next year.

"Demand considerations have attracted relatively little attention", Stephen Brennock at London-based broker PVM told the Financial Times at the end of October.

Meanwhile, a strong dollar also weighed on the oil market on Tuesday.

The voices that U.S. shale might underperform expectations could only be a bullish sign for oil prices. "We're on our way to set record crude oil production in 2018", said Andrew Lipow, president of Lipow Oil Associates in Houston. But higher prices are a double-edged sword for OPEC-not only due to a possible renewed resurgence of U.S. shale, but also because of its own far-from-perfect track record of sticking to pledges when oil prices rise. Oil prices are in the $60 range, which is the highest point in over two years.

The University of Michigan released a report on Friday showing a bigger than expected pullback in consumer sentiment in the month of November.

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