OPEC+ Policy Monitored, However, Geopolitical Tensions Remain

(CTN News) – OPEC+ policy and mounting geopolitical tensions raised crude oil prices on Wednesday in response to rising geopolitical tensions and OPEC+ policy.

The West Texas Intermediate contract for May delivery rose 28 cents, or 0.33%, to settle at $85.43 a barrel, up 28 cents, or 0.33%, from its previous settlement.

Brent crude oil for delivery in June rose by 43 cents to $89.35 a barrel, up by 0.48% from its settlement price of $89.28 a barrel previously. Since late October, the price of crude futures has reached its highest level in nearly two years.

Through at least the second quarter of 2018, some members of OPEC and allies with Russia,

Known as OPEC+, have voluntarily agreed to cut 2.2 million barrels of oil per day of production. A meeting of the Joint Ministerial Monitoring Committee of OPEC+ concluded Wednesday without recommending any changes to the current production policy of the group, two of its delegates reported.

A committee can only make recommendations to OPEC+ for them to consider at a formal meeting in order to implement them.

Despite a rise in oil prices Wednesday, the price rise was subdued by the build in crude stockpiles in the United States. In a report released on Thursday, the Energy Information Administration (EIA) said that commercial inventories, which do not include the strategic petroleum reserve, increased by 3.2 million barrels last week.

According to Bank of America, the U.S. crude and global benchmark oil prices have rallied more than 20% and 16% respectively this year due to improvements in economic growth expectations which should push the oil market into a deficit of 450,000 barrels per day in the second and third quarters.

Despite mounting geopolitical tensions, crude oil prices gained this week as a result. Drone strikes by the Ukrainian military against Russian energy infrastructure have continued to devastate the country’s third biggest oil refinery, the third-largest in the world.

OPEC member Iran has vowed to respond against Israel, accusing that country of bombing its consulate in Damascus and killing seven members of the Islamic Revolution Guard Corps as a result.

The escalating tensions between Israel and Iran have raised concerns that the Middle East will once again be engulfed in war, leading to disruptions in crude oil supplies as a consequence.

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