Oil prices jumped US$1 a barrel to hit a record US$62.30, before settling back to US$61.57 on the New York Mercantile Exchange.
US President George W Bush said in a statement he was “deeply saddened” by the death of a man he called “a friend and a strong ally of the United States for decades.”
Mr Bush also welcomed the ascension to the throne of King Fahd’s half-brother Crown Prince Abdullah, who has formally stepped into the role he has been acting in for the past 10 years.
“We wish Saudi Arabia peace and prosperity under his leadership… and the United States looks forward to continuing the close partnership between our two countries.”
UN Secretary General Kofi Annan said King Fahd was “a true friend of the United Nations” and had done much to develop his country.
European leaders said he would be remembered as a defender of Arab causes who worked for dialogue between the Islamic world and the West.
French President Jacques Chirac will be among those to attend the king’s funeral being held in Riyadh on Tuesday.
Periods of mourning have been announced in Egypt, Beirut, Jordan and Spain, where the government referred to the “deep historical links” between the two nations.
But noticeably absent from the statements were comments on the ultra-conservative gulf kingdom’s human rights record.
In its’ annual report in February on human rights progress around the world, the US State Department cited credible reports of torture and abuse of prisoners.
Last September, Saudi Arabia was added to the department’s list of countries in violation of religious freedom.
During King Fahd’s 23-year-long reign, the kingdom was guided through one of the region’s most turbulent periods, which saw the Gulf and Iraq wars and the rise of extremist Islamic militancy.
He was active within the Middle East in promoting peace plans to resolve the Israeli-Palestinian conflict and played a key role in hammering out the accord that ended 15 years of civil war in Lebanon.
However, these achievements have been underscored by criticisms of political repression, arbitrary arrests and routine flogging.
Also troubling for the kingdom is the recent surge of attacks carried out by Islamic radicals.
According to official figures, violence over the past two years 90 civilians, 42 security personnel and 113 militants have been killed.
One positive for the kingdom, which is the world’s largest petroleum exporter, is the booming economic growth flowing into the country in the wake of increasing oil prices as the country sets itself on a path of privatisation and new foreign investment.