Oil prices hit their highest levels early on Monday as markets tightened, while Saudi Arabia’s crown prince cemented his power over the weekend through an anti-corruption crackdown that included high profile arrests.
Brent futures, the international benchmark for oil prices, hit $62.44 per barrel early on Monday, their highest level for years now.
U.S. West Texas Intermediate (WTI) crude hit $56.00 per barrel in early trading, also the highest for many months now.
Crown Prince Mohammed bin Salman, Saudi Arabia’s designated future king, has tightened his grip on power through an anti- corruption purge by arresting royals, ministers and investors.
The arrest includes prominent business billionaire, Alwaleed bin Talal, and the head of the National Guard, Prince Miteb bin Abdullah.
“This consolidates the reforming process underway, part of which is a desire to drive the price of oil higher,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Bin Salman’s reforms include a plan to list parts of giant state-owned oil company Saudi Aramco next year.
Meanwhile, a higher oil price is seen as beneficial for the market capitalisation of the future listed company.
In oil fundamentals, traders said that there were ongoing signs of tightening market conditions.
U.S. energy companies cut eight oil rigs last week, to 729, in the biggest reduction since May 2016.
The decline in U.S. drilling activity comes as the Organisation of the Petroleum-Exporting-Countries-(OPEC) and non-OPEC group led by Russia have pledged to hold back about 1.8 million barrels per day.
The pact to withhold supplies runs to March 2018, but there is growing consensus to extend the deal.
While supplies are tightening, analysts say demand remains strong.
“Synchronous global economic growth and new supply disruptions are creating the most constructive oil price environment since 2014,” Barclays bank said.