Oil slumps below $65 as OPEC clash looms, trade war escalates
Oil slumps below $65 as OPEC clash looms, trade war escalates
Daily August WTI Crude OilMore
22 June, 2018, 16:17
On the other side, less privileged OPEC members like Iran, Venezuela, Iraq, Angola, Libya and Nigeria whose production levels have been under pressure by different geopolitical and economic factors like US sanctions and budget deficit need the prices to stay at current levels.
Resistance is being led by Iran, deeply wary of any move by regional rival Saudi Arabia that could push down oil prices at a time when Tehran faces renewed sanctions following US President Donald Trump's decision to quit its worldwide nuclear deal, which is likely to send the country's oil exports plummeting. The rise in Oil price is due to the production cut in past few years by OPEC.
Three OPEC sources told Reuters a technical panel - the organisation's economic commission - met on Monday to review the market outlook and present it to member countries' oil ministers later in the week.
In Russia meanwhile, private oil companies are finding it increasingly hard to justify the cutbacks to shareholders eager to cash in on the higher prices.
Meanwhile, Hindustan Petroleum Corporation Limited (HPCL) Chairman Mukesh K. Surana also said fuel prices may be lowered post the upcoming OPEC meeting. "A meaningful increase in long-haul flows from some of the key OPEC exporters would go a long way in turning the crude tanker market around, especially since it will impact the physical market as well as provide a boost to the all-important market psychology". China said it would impose tarrifs on a variety of U.S. goods, including crude and gasoline, in response to President Donald Trump's $50 billion levy on Chinese imports.
While Iran said on Sunday it was opposed to any increase to current quotas, officials from a number of other countries are optimistic that an agreement can be won for a relatively modest hike at this week's meeting in Vienna, the people said, asking not to be named.
Back in late 2016, OPEC famously announced production cuts in a desperate measure to reduce the volume of oversupply in the market, the major catalyst behind oil falling from above $110 to below $30 between mid-2014 and early 2016.
World oil demand in 2018 is forecast to grow by 1.65 mb/d, broadly unchanged from previous month's assessment, to stand at 98.85 mb/d.
"This escalation of the trade war is unsafe for oil prices", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.
Shipping data in Thomson Reuters Eikon shows that U.S. crude oil shipments to China have soared in value recently, jumping from just US$100 million per month in early 2017 to nearly US$1 billion per month now.
A cut in Chinese purchases of United States oil may also benefit Iran's sales, which Washington is trying to curb with new sanctions it announced in May. Brent crude jumped $1.55 to $74.99 a barrel.
USA crude exports to China have been rising sharply, thanks to a production surge in the past three years that was a welcome alternative to make up for the cut in supplies from Opec and Russian Federation. "In this connection, OPEC countries will benefit from lowering prices and cooling the surge of the United States activity", Alexei Belogoriev said.
Other countries hit by the United States tariffs have also retaliated, raising fears of a global trade war. India and Turkey have already targeted USA products, ranging from rice to autos to sunscreen.
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