Oil prices spike following Saudi Arabia's palace purge

The price of the benchmark US crude contract rose 25 cents to $55.89 per barrel in electronic trading on the New York Mercantile Exchange.

It rose as far as $56.28, its highest level since July 2015, and extended gains from last week.

Brent crude, the international standard, rose 42 cents to $62.49 per barrel.

One of the drivers for oil has been the news that the Saudi heir to the throne oversaw the arrest of dozens of the country's most powerful princes, military officers, businessmen, former ministers and government officials.

The sudden arrests included prominent billionaire al-Waleed bin Talal and the powerful head of the National Guard Prince Miteb bin Abdullah.

Saudi Arabia - the world's largest oil exporter - has been reining in oil production to boost oil prices.

Analysts believe the kingdom will continue on this policy.

"We believe the kingdom will stick to the OPEC+ deal and continue to focus on reducing global oil inventories," UBS oil analyst Giovanni Staunovo said, according to Reuters.

OPEC has planned a cut of around 1.8 million barrels a day into the whole of next year.

Sunday's arrests, which come as part of an alleged campaign to fight corruption in the kingdom, could mean that the general uncertainty over the stability of the country will continue to push prices up.

"Uncertainty about core regime stability has gone up a bit, so a higher risk premium is justified," Samuel Ciszuk, a senior adviser to the Swedish Energy Agency, told the Reuters Global Oil Forum.

Saudi Arabia is looking to part privatise the state-owned oil giant Saudi Aramco in what is expected to be the world's biggest initial public offering [IPO].

Concerns among Saudis are that with oil prices still well below pre-2014 levels the five percent sale of Aramco could be done on the cheap.

Agencies contributed to this story.