OPEC rumors from the USA drive oil prices lower

10 June, 2018, 03:10 | Author: Brooke Harris
  • Crude Oil

In the previous round of sanctions against Tehran, in which the European Union had taken part, Iranian oil exports plummeted by more than half to below 1 million barrels per day.

West Texas Intermediate for July delivery climbed as much as 24 cents to $66.19/bbl on the New York Mercantile Exchange and traded at $66.06 at 11:06 a.m.in Tokyo.

Long-term investment in the oil sector has been "choked off' in favor of short-cycle investment, and supplies from USA shale producers will likely be constrained through late 2019".

US oil production rose by 498,000 barrels a day (5.6%) and Libyan production more than doubled to 427,000 barrels a day as the country was excluded from OPEC's lower production quotas.

Crude oil prices are continuing to diverge as global benchmarks rise relative to land locked WTI.

The group and Russian Federation are due to meet at its headquarters in Vienna on June 22 to discuss production policy.

Customers waiting for cargoes include U.S. Chevron Corp, India's Nayara Energy and China National Petroleum Corporation (CNPC).

Pradhan is referring to the prospect of Saudi Arabia increasing production under the Organization of the Petroleum Exporting Countries (OPEC), in order to offset undue market tightening as a result of dramatically declining output in Venezuela and declining exports from Iran (as a result of the us resuming sanctions against the Islamic republic).

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The U.S. government had also unofficially asked Saudi Arabia and some other OPEC producers to raise output a day before Washington slapped new sanctions on Tehran.

Crude oil prices came under a modest selling pressure after the weekly report released by the U.S. Energy Information Administration showed that the crude oil inventories increased by 2.1 million barrels for the week ended June 1 amid an increase in output.

Despite this, oil markets are not unanimously bullish.

Following the drop in oil price to an all-time low, OPEC and other major producers including Russian Federation started to withhold 1.8 million barrels per day output in 2017 to rein in oversupply that had depressed prices since 2014.

Shortly before US President Donald Trump announced his decision to withdraw his country from the Iran nuclear deal, the White House reportedly attempted to ensure that Saudi Arabia would help maintain oil prices at a stable level.

"For the first time, the Saudi oil minister called us and said "we are revisiting our policy on oil output cuts", Indian Oil Minister Dharmendra Pradhan said.

As interesting as all these numbers may be, the June 22 OPEC meeting is drawing the most attention right now.

An economic crisis fed by the country's political instability has limited global supply, helping the Organisation of the Petroleum Exporting Countries (OPEC) hit its target for reduced output faster than expected.

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