By Christopher Alessi 

Oil prices closed higher Monday on the back of mounting threats between the U.S. and Saudi Arabia over the suspected killing of a dissident Saudi journalist.

Light, sweet crude for November delivery rose 44 cents, or 0.6%, to $71.78 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 35 cents, or 0.4%, to $80.78 a barrel.

Prices have recently been pulled lower by negative market data, including climbing crude supplies in the U.S. and downward revisions to demand growth by the Organization of the Petroleum Exporting Countries and the International Energy Agency.

However, growing tension between the U.S. and Saudi Arabia are providing some support to the market as another perceived risk to global supply.

President Trump said the U.S. would impose "severe punishment" on Riyadh if an investigation implicates the Saudi government in the case of Mr. Khashoggi, who disappeared after he entered the Saudi consulate in Istanbul on Oct. 2.

The tit-for-tat threats between the U.S. and the Saudis are "giving rise to new uncertainty for the oil market," according the analysts at Commerzbank.

Turkish officials have said they have audio and video recordings purporting to show that Mr. Khashoggi was killed inside the consulate.

On Sunday, the Saudis vowed to retaliate against any punitive measures from Washington, while noting that the world's largest exporter of crude oil "plays an impactful and active role in the global economy."

"Growing tensions over the disappearance of journalist Jamal Khashoggi at the Saudi consulate in Istanbul have proved supportive for oil prices, " according to Warren Patterson, commodities strategist at ING Bank.

"This has raised concerns that the Saudis may use oil as a tool for retaliation if any sanctions or other action is taken against them as a result of the disappearance of the journalist," Mr. Patterson said.

Gasoline futures increased by 0.1% to $1.9443 a gallon and diesel futures rose 0.2% to $2.3257 a gallon.

Stephanie Yang contributed to this article.

Write to Christopher Alessi at christopher.alessi@wsj.com

(END) Dow Jones Newswires

October 15, 2018 15:51 ET (19:51 GMT)

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