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The price of oil soared to insane heights: what's going on

13 December, 2018, 06:23 | Author: Sara Gill
  • Цена нефти взлетела на сумасшедшую высоту что происходит

Following two days of meetings, the Organization of the Petroleum Exporting Countries that includes the likes of Saudi Arabia and Iraq said they would cut 800,000 barrels per day for six months from January, though some countries such as Iran, which is facing wide-ranging sanctions from the United States, have been given an exemption.

"That compares to our forecast for oil demand to increase by just 1.1 million b/d in 2019, leaving little room for a significant increase in OPEC production next year and making a production cut necessary to stabilise prices". Though the liquid commodity staged a rebound at first, surging US supplies and softer-than-expected USA sanctions against Iran's energy sector pushed the commodity into the bear market recently. "If no agreement is reached, oil prices have significant downside".

"So when does the US send a delegate to OPEC meetings?" said Kyle Cooper, consultant at ION Energy in Houston. United States crude prices spiked almost 5% to $54 a barrel on the news.

Mr Trump tweeted on Wednesday: "Hopefully OPEC will be keeping oil flows as is, not restricted". Deepak Mahurkar, partner and leader at PricewaterhouseCoopers (PwC), said that while OPEC members cut production with the intent of increasing oil prices, many other factors contribute to the final outcome and so only time will tell how the production cuts help the OPEC's cause.

Russian Federation gave a commitment to reduce output by 228,000 bpd from October levels of 11.4 million bpd, though it said the cuts would be gradual and take place over several months. "I do not know when the U.S. administration will take lessons from this trend", the Iranian petroleum minister said.

That means Saudi Arabia will cut more than any other country. As the Trump administration prepared this summer to choke Iran with renewed sanctions, including a ban on oil exports, Saudi Arabia and other big oil producers answered the White House's call to open the spigots to avoid nasty price spikes.

Цена нефти взлетела на сумасшедшую высоту что происходит

Before Thursday's meeting, Saudi oil minister Khalid al-Falih pointedly said Washington should back off.

OPEC members account for a total 1.2 trillion barrels, or 81.9 per cent of world crude oil reserves, against about 268.6 billion barrels, or 18.1 per cent. The Delaware Basin, the less drilled part of the field, holds more than twice the amount of crude as its sister, the Midland Basin, the U.S. Geological Service said Thursday.

He explained that the estimated surplus now on the market amounted to 1.3-2.4 million barrels per day. "The U.S. economy is actually much more integrally linked with the global oil market [now] because we produce and consume oil in greater volumes", she said. The US announced exemptions for countries such as India, China etc., allowing them to import crude oil from Iran.

The group agreed in November 2016 to cut oil production by 1.8 mbpd to rid oversupply in the market and raise oil prices, and extended that until the end of 2018.

"Although we don't think that the current pricing differentials between Canadian barrels and USA barrels will be permanent, we are obligated to our shareholders to protect our business and our balance sheet until Canadian prices improve", said Cardinal in a news release.


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