Oil prices dip at opening after two-year highs on Monday

With Opec meeting later this month, oil markets rallied on geopolitical risks

Brent is teetering close to $28.94 level seen in January 2016, which prompted Saudi Arabia and Russia to form an alliance. Reuters

Oil prices edged down in early trading today as the dust settles on Saudi Arabia’s corruption probe.

Brent crude, the international benchmark, opened at US$64.12 today after pushing past US$64 a barrel yesterday. The last time that price was seen was in June 2015. North America’s West Texas Intermediate closed at $57.49.

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Markets reacted to the Saudi Arabia purge which resulted in a roundup of government officials and businessmen accused of money laundering, bribery and extortion. The purge, led by Crown Prince Mohammed bin Salman, included Prince Alwaleed bin Talal of Kingdom Holdings, Nasser bin Aqeel Al Tayyar, founder of one of the country’s largest travel companies, Al Tayyar Travel, and Sheikh Mansour Al Balawi, former president of Saudi Arabian sports club Al Ittihad.

In addition, the escalating tensions between the kingdom and Iran intensified as Saudi Arabia blamed Iran for a missile attack, dubbing it an “act of war”. A Saudi Arabia-led coalition released a list of 40 names of those tied to the Iran-backed Houthi rebels, offering a reward of more than $440 million.

Should oil prices climb further, the Opec meeting scheduled for the end of the month may take a different turn. The major players, including Saudi Arabia and the UAE, have signalled support for a production cut extension. However, the Washington-based International Monetary Fund (IMF) said in a report last month that Saudi Arabia would need prices to reach $70 a barrel to break even.