Commodities: Oil Events, OPEC+ Meeting

Oil prices continue to rise as regional tensions in the Middle East reached the highest point since the beginning of 2019. Strike on Iran was called off while U.S. generals were already preparing the combat operation. U.S and Iran have different positions whether U.S. drone was inside the Iranian airspace or not. Hopefully, the chances of military conflict decreased as Donald Trump changed his mind regarding the retaliation because of the lost drone.

Oil prices are on the rise. As of today, the Brent crude oil price increased by 26 cents or 0.4% and reached $65.46 a barrel. West Texas Intermediate (WTI) price also continues to strengthen its position. The current price is bigger by 40 cents or 0.7% at $57.83 a barrel.

U.S. Secretary of State Mike Pompeo announced that on Monday additional sanctions would be imposed on Iran. However, as the demand is rising. Coupled with tensions oil prices continue to grow as analysts are waiting how the situation will unfold.

There are two major oil events scheduled for the next two weeks. The first one which has no direct connection to the oil prices but will have a severe impact is the G-20 summit in Osaka, Japan. The second one is the event which will shape the oil market is the OPEC meeting in Vienna. Let’s have a closer look at these events.

U.S. President will meet Chinese President Xi Jingping during the G-20 summit to discuss the possible resolution of the trade war. Both leaders are in a problematic position as none of them wants to lose this trade dispute, which might negatively affect their reputation. The global economy is slowing down, which makes the oil prices unstable as the supply is exceeding the demand.

Donald Trump declared that he would take part in the Presidential election in 2020. Due to all of the reasons mentioned above, the trade dispute has huge importance for his successful reelection. Xi Jingping is also reluctant to agree to the conditions which will undermine his authority in China and abroad.

OPEC+ meeting

Another event which the analysts are closely monitoring is the OPEC+ meeting scheduled for July 1-2 in Vienna, Austria. The outcome of this event is way easier to predict that of the G-20 summit. OPEC and its allies such as Russia agree that they should continue to reduce the daily production. It means that a similar document will replace the current agreement which expires at the end of the month.

According to the Bank of America Merrill Lynch report, even though the demand is still weak data for April shows that it is stronger than in March. In such a scenario, OPEC+ might achieve some stability as reduction along with the stronger demand will help them to stabilize the oil market.

To briefly summarize the oil market, it is worth to have a look at the upcoming G-20 summit. The outcome of this summit will influence the development of the oil market. Even the small progress might result in oil prices becoming more expensive. Another anticipated event is the OPREC+ meeting in Vienna. Major oil producing countries will discuss the ongoing situation in the oil market and plans for the future.