Trade war? No…but Middle East Tensions Keeping Crude Oil Prices High
The oil market has already been tightened due to ongoing OPEC plus supply cuts. There is a production decline from Iran and Venezuela, and a Russian outage due to the Urals contamination. Is there an ongoing Trade War?
Heightened tensions in the Middle East are keeping oil prices firm. The US WTI crude and the Asian benchmark Brent have gained about three percent so far during this week.
Increasing trade war tensions between the US and China are a threat to global economic growth and demand for oil. And oil traders are now more worried about supply tightness than the slumping demand.
The group will meet in June to decide whether to extend the pact. It is expected that if OPEC sticks on with its April output numbers it would lead to an oil undersupply in the world market this year.
In the meantime, the output from the other top producers outside OPEC, like the US would keep the market well supplied. As per IEA, the booming oil output from the US would offset the shortage of exports from Iran and Venezuela.
In the first half of the year, US output was halted due to reduced rig counts and maintenance in the Gulf of Mexico but the agency expects higher output this year due to the uptick in drilling activity.
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