Oil prices drop as supplies increase

Daniel Fowler
June 13, 2018

That move took US crude from about $50 a barrel in late 2016 to more than $70 in 2018.

A man fixes a sign with OPEC's logo next to its headquarters' entrance before a meeting of OPEC oil ministers in Vienna, Austria, November 29, 2017.

The Organization of the Petroleum Exporting Countries and some non-OPEC producers, led by Russian Federation, agreed to cut output in 2017 to reduce a supply overhang, which has led to a 60 percent spike in oil prices over the past year.

Oil prices have risen by around 60 per cent over the a year ago after the Organization of the Petroleum Exporting Countries and some non-OPEC producers, including Russian Federation, started withholding output in 2017 to reduce excess supply.

Iran's OPEC governor, Hossein Kazempour Ardebili, fired back quickly at Trump's words.

Oil prices are set, for the most part, by Saudi Arabia and, to a lesser extent, it's OPEC partners.

"The demand metrics here are incredible for crude oil and gasoline", said John Kilduff, a partner at Again Capital in NY.

Prince George plays with toy gun at the polo
Many balked at the toys, given Britain's knife- and gun-related violence, which is "rising at an accelerating pace", according to the U.K.

After peaking in May at $80.50 a barrel, prices have pulled back, with the price of Brent crude trading on Wednesday near $76 at barrel, partly in anticipation that the deal may end, and as Saudi Arabia and Russian Federation have already started increasing production. The U.S. has lobbied Saudi Arabia and other members, arguing they need to raise output by 1 million barrels a day to keep prices in check, people told Bloomberg News earlier this month.

In April, Trump also blasted OPEC on Twitter, accusing the group of "artificially" raising oil prices.

The full organization, plus non-members like Russian Federation who agreed to take part in the earlier round of production cuts, are meeting June 22 and 23 in Vienna. "The world economy is feeling some pain from higher oil prices", the IEA commented in its latest market report, adding "Increasing trade tensions are the main risk to our oil demand forecast".

With output in Russian Federation rising back above 11 million bpd in June and Saudi production climbing back above 10 million bpd, supplies from the top three producers are increasing.

In the United States, rising gasoline prices have threatened to blunt other economic headwinds. Trump tweeted in April.

US ally Saudi Arabia remains OPEC's most powerful member - with enough production capacity to manipulate global supplies.

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