The price of US crude oil futures rose above the $60 mark to the highest level since January 11, 2020, at $60.95 per barrel. Investors’ hopes for more stimulus measures in the United States, and relaxation of the new coronavirus epidemic lockdown measures, have helped support the rise in oil prices, which rose nearly 5% last week.
The oil prices continue to climb higher. The price of oil has now recovered after it dropped to a five-year low. In fact, the price of oil is now up over $60 a barrel, which makes many people wonder what will trigger the price of oil to go even higher.
According to the latest forecast issued by the Organization of Petroleum Exporting Countries (OPEC), the monthly average price of OPEC crude jumped to $55.97 a barrel this February, in a move paving the way to break the barrier of $56. This is a 2.9% increase compared to its average price recorded in January of the same year.
The head of the Russian Investment Fund, Kirill Dmitriev, praised his country’s cooperation with Saudi Arabia, under the umbrella of the OPEC+ alliance, which resulted in the stability of the oil market after the price collapse in April of last year, following the Coronavirus pandemic.
Oil prices have begun to rise this week. Driven by the rise in the stock market, the price of Brent crude oil rose to $55.04 per barrel, the highest level since February last year. Saudi Arabia’s plan to unilaterally cut production has made investors optimistic, while the general rise in the market has further promoted optimism.
Crude oil futures fell slightly on Monday from a nine-month high. Investors weighed the impact of international tensions on the crude oil market. At the same time, the continuous surge in new coronavirus epidemic cases caused demand concerns. In addition, the dollar fell 1.1%.
Norway announced the internet to increase the oil production and export starting January 2021. Hence, this will be a 3rd nation, which will not follow the OPEC+ agreement. The OPEC+ agreement called for a decrease in crude oil output by an initial 9.7 million barrels per day (b/d) that gradually tapers through April 2022, the end of the current agreement period.
Oil prices edged up Tuesday amid news from the US financial sector and stocks, news on vaccine research and development progress, and news about OPEC+ considering delays in increasing crude oil production. The news reassured the market that epidemic prevention measures will lead to a decline in energy demand.
Russian President Vladimir Putin said on Thursday that Russia does not rule out the possibility of delays in OPEC+ production plans. This latest sign indicates that OPEC may limit crude oil production for a longer period of time as the epidemic once again affects demand.
Crude oil inventory data fell for two consecutive weeks. Crude oil ended its three-day downward trend, and closed higher, the highest close in nearly seven weeks. Meanwhile, the pending US economic stimulus package is expected to boost energy demand. Everyone, including the energy industry, is awaiting word on a deal.
International oil prices fell on Monday due to China’s economic growth rate in the third quarter, which was lower than expected. China’s energy demand is still inevitably dragged down by the renewed surge in the number of new coronavirus infections in other countries around the world.
According to Reuters, due to concerns about the slow recovery of oil demand, the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) have put pressure on oil-producing countries whose output exceeds their target, requiring them to further reduce production in August-September.
An Iranian media network that is aligned to the reigning regime has issued a warning to the United States government against carrying out any moves that would jeopardize its oil shipment to Venezuela. The ship that is destined for the Latin American nation has already left the port.
US President Donald Trump allegedly gave the Saudi administration an ultimatum to stop the infamous price war with Russia. On April 2, Trump apparently made a phone call to Saudi Crown Prince Mohammed bin Salman (MBS), letting him know that unless the Organization of the Petroleum Exporting Countries (OPEC) cut oil production, he would allow lawmakers to go ahead and legislate a US troop withdrawal from the kingdom.
Under the new Saudi- Russo oil deal, Saudi Arabia and Russia lead the record for oil cuts as part of the agreement committed by 23 countries to withhold 9.7 million barrels a day from markets. Western publications, including The New Yorker, ran articles this week with headlines such as “How the Russian-Saudi Oil War Went Awry—for Putin Most of All.”
Global oil demand has fallen by 30 million barrels a day due to the outbreak of the coronavirus, which has quarantined nearly half of the world’s population. Another result has been a sharp drop in the global economy, for which the world was seemingly overdue. However, OPEC Plus has only agreed to cut production by 10 million barrels for the two months of May and June of this year.
Mexican President Andres Manuel Lopez Obrador has won a major economic victory for his country in the face of fierce pressure from other OPEC countries. US President Donald Trump recently brokered a deal to have members of the group cut oil production. AMLO, however, refused to cut oil supply by more than 100,000 barrels per day, a move that threatened to reverse progressive talks within the union
Onсе Saudi Arabia аnnоunсеd thе OPEC+ agreement to reduce wоrld оіl production bу nеаrlу 10 реrсеnt, оіl prices іn futurе соntrасtѕ in Aѕіа rose аftеr a fеw hоurѕ. Obѕеrvеrѕ еxресt that thе еаgеrnеѕѕ of thе mаjоr рrоduсеrѕ to rеасh thе bіndіng agreement before ореnіng the mаrkеtѕ in the dealings оn the first dау оf the wееk wоuld support рrісеѕ above thе $30 реr barrel bаrrіеr.
With declining oil demand following the Coronavirus Crisis, major oil-producing countries have reached a historic agreement to cut production by 10 million barrels per day. The move is a small step in easing concerns about falling oil prices. It also marks the improvement of relations between Saudi Arabia and Russia, two powerful OPEC Plus blocs.
This week, one of the main topics around the world is the so called “oil war” between Russia and Saudi Arabia. A myriad of publications are claiming the Russian economy will tank during this oil price war. According to the various economic models, the Russian economical crises is supposed to reach its peak in 2025. That is another reason, beside Putin’s personal aspirations, why he wants to remain in control of Russia. At that point, it could be possible for the West to weaken Russia.
OPEC is considering extending its oil production cuts until the end of the year, as the markets are still looking downward, but discussions remain at an early stage. Russia’s TASS news agency quoted a source within the organization on Friday. The source said the group, which includes two oil exporters, was due to meet in March, but it might also meet in June to decide on the policy.
Russia’s head of the Minenergo, Alexander Novak, recently stated the nation’s interest is to gradually severe ties with OPEC, the Organization of the Petroleum Exporting Countries comprised of 14 nations. Founded in 1960 in Baghdad by the first five members, OPEC moved its headquartered in 1965 to Vienna, Austria. The countries that joined later were:
The UAE, the wоrld’ѕ sixth-largest hоldеr of oil rеѕеrvеѕ, hаѕ bесоmе аn inspiration fоr the rest оf the world аѕ the wоrld’ѕ mоѕt dіvеrѕіfіеd energy есоnоmу, along wіth trаdіtіоnаl оіl аnd gаѕ еxроrtеrѕ. Currеnt аnd futurе sources оf еnеrgу up tо 2030 rаngе from oil, gаѕ and renewable еnеrgу, ѕuсh аѕ wind, solar, аnd hуdrоеlесtrіс, аѕ well аѕ new nuсlеаr еnеrgу, through the Barakah plant, whісh іѕ оnе of the largest іn the wоrld.
The World Bank has downgraded Russia’s economic growth forecasts this year, from 1.2% to 1%, and GDP growth next year from 1.8% to 1.7%. The forecast for 2021 remains unchanged, at 1.8%. The bank said “the slowdown stems from multiple factors, which are compounded by the continuation of international economic sanctions.”
If oil demand is down so much due to the China trade war and tariffs, how come the more economically sensitive materials, such as copper, have not felt the same economic downward price effects?
Today China has asked it’s refineries to hold off on placing new orders for crude oil imports in anticipation of lower prices once and if demand stalls further. The Chinese buyers have cut off purchases of U.S. crude oil as the trade dispute between Beijing and Washington continues.
- Trump aims to drive Iran’s oil exports to zero by ending sanctions exemptions that it previously granted to some of the Islamic Republic’s biggest customers.
- Saudi Arabia is ready to start pumping more oil if the United States indeed ends the sanction waivers they granted eight Iranian oil importers last November, citing a source that remained unnamed, but Riyadh will not rush into a reversal of the cuts. It will first examine the effect of the sanction waiver cancellation before it decides how to respond to it.
- Oil dominates Venezuela’s economy, accounting for almost all of its export earnings. Its biggest customers have been the US, followed by India and China. But over the past decade, oil production and prices has collapsed and the country is in a deep economic crisis.
- The President of Venezuela’s opposition-dominated National Assembly Juan Guaido will announce new boards of directors for state oil company PDVSA and its U.S. business, Citgo, UPI reports. U.S. Treasure Secretary Steven Mnuchin said the he’ll hold PDVSA’s proceeds from crude oil sales to the United States, adding that the company could avoid being sanctioned if it recognized Guaido as the legitimate president of Venezuela.
- Saudi Arabia is determined to restore the balance on the oil market and is cutting deeper than required in the OPEC+ deal, with February crude production likely close to 10.1 million bpd, compared to the 10.3-million-bpd ceiling in the production cut agreement.