What tension with Saudi Arabia means for investors

Posted at 2:26 PM, Oct 16, 2018
and last updated 2018-10-16 16:42:55-04

Investors are bracing for the possibility of Saudi Arabia using oil as a weapon.

The kingdom is facing threats of punishment over the unexplained disappearance of a Washington Post journalist, Jamal Khashoggi, and is talking of retaliation if America imposes sanctions. A leading Saudi commentator has even hinted that oil could be used as a weapon.

A rhetorical threat to withhold supplies could drive up prices, Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNN Business.

Saudi Arabia could go further, by “slow-walking” output increases to make up for reduced Iranian supplies when US sanctions on Tehran take effect next month, Croft added.

Rising oil prices would harm consumers, but they could give energy stocks a boost. Analysts are expecting energy companies to rake in monster earnings in the third quarter.

Binky Chadha, chief global strategist at Deutsche Bank Securities, will discuss what could happen next with CNN Business editor-at-large Richard Quest on “Markets Now” on Wednesday.

Chadha and Quest will also discuss the biggest risks to the market and the recent volatility.

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