Commodities: Oil industry news on Monday
The oil sector is crucial for the OPEC members as well as other oil-producing countries. It is in their best interests to keep the oil prices as they might lose a significant part of their profits. It doesn’t mean that oil-producing countries have the same strategy when dealing with the oil industry.
Commodities such as oil are important for the stability of the global economy. Right now, it is a tricky situation. At the one hand, producers want to maximize their profits and on the other hand, the global economy is slowing down. Another pressing issue for the oil sector is the ongoing trade war between the U.S and China. Representatives from China and the U.S. will have a meeting in October. However, their current relations makes it harder to predict the outcome of this meeting in October.
Oil prices increased on Monday. The price of Brent crude futures rose by 46 cents to $62.00 a barrel. The price of West Texas Intermediate (WTI) crude increased 48 cents to $57.00.
OPEC and the oil prices
OPEC and its allies are trying to keep the oil prices by reducing daily production. They employ this method to stabilize the oil market. However, there are several factors which can undermine their efforts. One of the most serious threats to their plan is the U.S and its oil sector.
On Sunday, the Prince Abdulaziz bin Salman became the new energy minister of Saudi Arabia. He is the son of Saudi Arabia’s king, Prince Abdulaziz replaced Khalid al-Falih, and Prince Abdulaziz is no stranger for the local as well as the international community. He is not only a member of the royal family, but he was a member of the Saudi delegation to OPEC.
Prince Abdulaziz mentioned that he has no intention to change the agreements reached by his predecessor. He said that the deal regarding the oil cuts would remain in place. According to the current deal, signatories agreed to reduce oil production by 1.2 million barrels per day. The speech of Prince Abdulaziz once more highlighted that OPEC’s policy is unlikely to change for the upcoming months. However, the situation is not as simple as it might appear for the people who are familiar with this organization.
In August, Russia’s oil production surpassed the quotas agreed by the OPEC+. Two OPEC member states Nigeria and Iraq also increased their production.
U.S. oil production
As mentioned-above OPEC is facing severe completion. It is worth mentioning that at the moment, the U.S. is the biggest oil producer in the world. Second place belongs to Saudi Arabia. The time when OPEC single-handedly dictated the rules are gone. It means that they should take into consideration that rule as are not the same as used to be several decades ago.
The U.S. deputy energy secretary Dan Brouillette made a statement which might have a severe impact on the oil prices. He said that the U.S. would produce as much energy as it can to strengthen its position on the market. Deputy Secretary also noted it does matter how this decision will affect the oil price.
The oil prices are on the rise. The OPEC+ will meet in Abu Dhabi. The joint ministerial monitoring committee will meet on Thursday.