Oil prices expected to soar in wake of killings

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1085944387359

Oil prices are expected to surge - if only temporarily - when already jittery markets reopen globally on Monday after the weekend attack on oil industry personnel in Khobar, eastern Saudi Arabia.

Although Saudi Arabian oil supplies were not interrupted and Khobar, the Persian Gulf coast town, has no production, export or refining facilities, analysts said on Sunday that fears about the stability of the Saudi regime, the world's most important oil exporter, and further al-Qaeda-linked attacks will be deepened by the raid.

So concerned are markets about supply shortages that the recent Saudi pledge to raise production levels ahead of Thursday's meeting of Organisation of Petroleum Exporting Countries has done little to push prices below the recent $40 per barrel level.

"Now terrorist attacks are targeting one of the core points of the global oil system," said Antonio Merino, chief economist of Repsol YPF, the Spanish oil company. "This is especially relevant at a time when it is generally accepted that more Saudi oil is needed."

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