The Dow Jones index has fallen more than 327 points, or 1.3 percent, to 25,379 on Thursday after the US Treasury Secretary Steven Mnuchin withdrew from an investor conference in Saudi Arabia.
Mnuchin is one of the latest high-profile figures to back out of the conference as tension increases between the United States and Saudi Arabia over the disappearance and alleged murder of journalist Jamal Khashoggi.
Mnuchin’s cancellation raises fear among investors that Saudi Arabia might retaliate by cutting oil supply if the US decides to impose sanctions over Khashoggi’s case. Turki Aldakhil, general manager of the Saudi-owned Al-Arabiya news channel, said the US punishment might lead oil prices to soar above US$200 per barrel.
According to OPEC, Saudi Arabia produces 10.5 million barrels of oil per day. The country has previously agreed, along with Russia, to fill out the production gap created by sanctions on Iran. While the US remains the world’s top crude oil producer at 11 million barrels per day, Saudi Arabia still retains a significant influence over global oil prices.