The international market of crude oil seems to be in panic. Yet, the panic is snowballing. The reason for that is said to be the statement made by Russian Energy Minister Alexander Novak about the possibility of easing the OPEC+ deal in June 2018, which came as a surprise to the international trading community.
In response to the statement, oil prices started going down on Thursday. The next day, a barrel of Brent oil cost under $77, which is over 2% below the recent open prices. At that point, the biggest newsmakers were participating in a major energy summit in Saint Petersburg, Russia. During the summit, they made some more of those unexpected statements. For instance, Mr. Novak is convinced that when oil prices are too high, the market gets overheated, which further leads to instability and excessive market supply. In the meantime, the Oil Minister of Saudi Arabia confirmed that the OPEC+ participants would probably start increasing their oil production in the second half of the year. The Russian minister agreed and clarified that this would probably take place somewhere in Q3 2018.
It’s interesting to note that just a couple of weeks ago, most experts were convinced that the OPEC+ deal would be extended until the end of the year during the next summit. However, their desire to stick to the agreement was undermined by a number of geopolitical factors like Donald Trump’s decision to impose new sanctions on Iran, the OPEC’s second-biggest oil producer, as well as the aggravating oil crisis in Venezuela and some other factors.
Today, the international community is no longer divided over the direction of the future trend. Instead, they are trying to guess how deep and fast the prices will go down in the near future. Some of the participants of the mentioned summit say that 50-60 dollars per barrel represent fair oil prices at this point.
