Oil Prices Waver After Iran’s President Dies, Saudi King Falls Ill

♦ 05/20/2024 ♦ Leave a comment

Oil prices wavered Monday after Iran’s President Ebrahim Raisi died in a helicopter crash Sunday, according to state-run Press TV. But the oil move was fairly muted in early trading.

Iranian foreign minister Hossein Amir-Abdollahian was also killed along with several other passengers after the helicopter made a “difficult landing” in the northwest of the country, state TV reported. Iranian rescuers searched the site, battling bad weather, but found no signs of life, Iran’s interior minister Ahmad Vahidi told state TV.

Separately in Saudi Arabia, one the world’s biggest exporters of oil, King Salman has been diagnosed with a lung infection and is set to undergo treatment, Saudi Press Agency reported early Monday.

Oil prices initially ticked higher amid the uncertainty surrounding both those developments in the Middle East, before pulling back. Brent crude futures, the international benchmark, fell 0.3% to $83.71 after spiking 0.5% earlier in the day—Brent crude is now up 8.7% in 2024 amid ongoing tensions in the region. West Texas Intermediate futures declined 0.4% to $79.27, and is up 10.6% this year.

ING’s FX strategist Francesco Pesole said Raisi’s death and King Salman’s health concerns could lead to a tightening in the oil market, and therefore offer some upside for the U.S. dollar. “So far, the market impact of these Middle East developments has been contained,” he added.

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The unexpected death of Raisi will raise questions over who will succeed the country’s supreme leader Ayatollah Ali Khamenei, who is 85.

It may not bring about much policy change for now as Vice President Mohammad Mokhber will step in as interim president. However, a presidential election must be held within 50 days, creating political uncertainty in the region.

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