Oil prices hit a two-year high Monday on rising tensions in the Middle East following a wave of arrests in Saudi Arabia and a missile attack on Riyadh by Yemeni rebels.
Brent crude, the global oil benchmark, was up 0.52% to $62.39 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.50% at $55.91 a barrel.
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Oil prices have advanced more than 15% since the beginning of September -- their best two months in over a year.
Crude prices again jumped Monday after officials in Saudi Arabia detained more than five dozen princes, ministers and prominent businessmen in a bid to tackle alleged corruption in the country. Among the detained were Prince al-Waleed bin Talal, a businessman with investments in high profile western firms.
Rising prices were driven "by the unrest in the Middle East with missile incident in Yemen but also the reshuffle in Saudi Arabia and the antigraft sweep there," said Bjarne Schieldrop, chief commodities analyst at SEB Markets.
Some analysts view the move as a way for King Salman to consolidate power and ensure that his son inherits the throne. Prince Mohammed bin Salman was appointed crown prince and heir apparent less than five months ago, an action that stirred opposition in the kingdom.
The 32-year-old Crown Prince Mohammed is leading the country's newly established anticorruption agency and the government's efforts to overhaul the kingdom's economy and free Saudi Arabia from its dependence on oil revenues.
Investors are concerned that the power struggles in Saudi Arabia, the world's top exporter of crude, could affect the oil market.
"More important for us is whether his succession will bring instability within the country," said Eugen Weinberg, head of commodities research at Commerzbank.
Oil futures were also buoyed after Yemen's Houthi rebels fired a ballistic missile on Saturday that reached the outskirts of Saudi Arabia's capital before being shot down.
Riyadh is leading a U.S.-backed military coalition that is fighting to unseat the Houthis, whom it sees as proxies of its main regional rival for power, Iran. The coalition began airstrikes, and then a ground campaign, against the Houthis in 2015.
No one was injured but the incident has deepened fissures between Saudi Arabia and Iran, both members of the Organization of the Petroleum Exporting Countries.
Analysts are particularly concerned that the ramped up hostilities could frustrate moves to prop up the price of oil and remove a global crude glut.
OPEC came to an agreement last year with several other major producers including Russia to curb oil output by 1.8 million barrels a day.
As the cartel's November meeting nears, some market participants expect to see another extension of the cuts past the first quarter of 2018.
Still, some investors view the cartel's actions as insufficient.
"We are still convinced that the fundamental data justify a significantly lower oil price," said analysts for Commerzbank in a recent note. "After all, OPEC's continued implementation of the supply cuts is unlikely to be enough on its own to rid the oil market of the surpluses in the longer term."
Despite a reported decline in U.S. drilling activity, analysts point to rising U.S. shale production because of higher oil prices.
U.S. exports reached 1.55 million barrels a day in October, some 550,000 barrels higher than the figure for the same month last year, according to data from the Energy Information Administration.
American exports of gas oil and diesel have been "particularly strong over the last four weeks," said analysts for JBC energy in a recent note.
Nymex reformulated gasoline blendstock -- the benchmark gasoline contract -- fell 0.18% to $1.79 a gallon. ICE gasoil changed hands at $555.00 a metric ton, up$7.75 from the previous settlement.
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(END) Dow Jones Newswires
November 06, 2017 07:56 ET (12:56 GMT)