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OPEC poised to defy Mr Trump once again by keeping a lid on oil output

Gasoil News - Published on Thu, 23 May 2019

Image Source: Voice of Nigeria
CNBC reported that major oil-producing nations are leaning toward keeping a lid on production throughout 2019, defying President Mr Donald Trump’s calls to open the taps and cut the cost of crude. OPEC and a group of allies led by Russia are trying to keep supply and demand in balance and stabilize prices by pumping less oil. Over the weekend, a committee representing the so-called OPEC+ alliance strongly signaled the group will extend the policy, which has helped to boost oil prices by about USD 20 a barrel this year. If OPEC+ follows that course when producers meet in June, it would be the second time in six months the group ignored Trump, who lobbied against the current production cuts last fall. So long as the production caps remain in place, oil prices are likely to remain anchored near six-month highs around USD 63 a barrel. That would keep a thorn in Trump’s side. The economy-focused president wants to lower prices at the pump, but his foreign policy is putting upward pressure on oil futures, which in turn increases gasoline costs.

Washington has restricted global oil supplies by slapping sanctions on OPEC members Iran and Venezuela. Trump wants his allies in Saudi Arabia and the United Arab Emirates, two of OPEC’s biggest producers, to offset those losses by pumping more oil. But the Saudis and Emiratis have not committed to hiking output. On Sunday, Saudi Arabia’s influential oil minister, Mr Khalid al-Falih, warned that global crude stockpiles are rising, threatening to swamp the world in oil and cause prices to collapse.

Mr Falih told reporters at the committee meeting in Jeddah, Saudi Arabia “Overall, the market is in a delicate situation. On the one hand, there is a lot of concern - and we acknowledge it - about disruptions and sanctions and supply interruptions. But on the other hand, we see inventories rising. We see plentiful supply around the world which means we think, all in all, we should be in a comfortable situation in the weeks and months to come.”

Currently, OPEC+ nations are aiming to keep a combined 1.2 million barrels per day off the market. However, supply from the group has actually fallen much further, according to the group’s Joint Ministerial Monitoring Committee. The panel was established to monitor compliance with production quotas under the output deal, first agreed to in December 2016 and renewed last fall.

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Posted By : Rabi Wangkhem on Thu, 23 May 2019
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