As questions rise over Khashoggi, so does the price of oil

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Oil prices rose on Monday as tension over the disappearance of a prominent Saudi journalist stoked supply worries, although concerns over the long-term demand outlook dragged on sentiment.

U.S. crude was last up 40 cents at $71.74.

“Growing tensions over the disappearance of journalist Jamal Khashoggi at the Saudi consulate in Istanbul has proved supportive for oil prices,” said ING commodities strategist Warren Patterson.

Saudi Arabia has been under pressure since Khashoggi, a critic of Riyadh and a U.S. resident, disappeared on Oct. 2 after visiting the Saudi consulate in Istanbul.

President Donald Trump threatened “severe punishment” if it is found that Khashoggi was killed in the consulate.

Saudi Arabia said it would retaliate to any action against it over the Khashoggi case, state news agency SPA reported on Sunday, quoting an official source.

“This has raised concerns that the Saudis may use oil as a tool for retaliation if any sanctions or other action is taken against it,” Patterson said.

Analysts said, however, that it was difficult to imagine Saudi Arabia taking action that would hit world oil supply.