Oil Keeps Rising as Tension Heats Up Ahead of OPEC Meeting

In November 2018, Donald Trump tweeted: “Oil prices getting lower … a tax cut for America and the world! Enjoy! $54 … Thank you to Saudi Arabia.”

Five months on, with oil prices more than $70, Trump will be in a less celebratory mood as Opec’s oil ministers and their allies gather in Jeddah on Friday, without Iran. The main agenda item will be the implications for oil of three interconnected American foreign policy crises – in Venezuela, Iran, and Libya. Together these crises, being played out simultaneously, have the potential to scrub as much as 3.5m barrels of oil per day from the markets.

Rarely has there been a moment when a US foreign policy has had so much potential to cause such dislocation to oil markets, and as a result to hand so much market power to America’s Gulf allies to exploit that belligerence.

Brent crude graph

The energy ministers will be in the enviable position of being able to survey both projected rising oil demand for the remainder of the year, just as US foreign policy forces a contraction in supply.

The prospect is that the price of oil – which has already risen by 40% this year to more than $72 a barrel – could go much higher.

For Saudi Arabia, needing an oil price greater than $80 a barrel (and in the range of $85–$87 for the current year) in order to balance its budget, this is a welcome gift.

via The Guardian

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza