A new accord by the Organization of the Petroleum Exporting Countries (Opec) to extend its curb on output has not yet had its desired effect of driving up prices but the effect of earlier cuts may be paying off for the cartel, an Irish energy has said.
Oil prices were largely flat yesterday after steep losses the previous session, with rising US production weighing against comments from leading Gulf oil producers that an extension to Organisation of the Petroleum Exporting (Opec)-led supply cuts was likely.
To understand why Saudi Arabia changed course and decided Opec should go back to managing supply, look at two of the kingdom’s biggest policy challenges: The urgent need to plug holes in its budget and the plan to sell a stake in the state-owned oil monopoly.
Crude rose above $55 a barrel to hit a 16-month high yesterday as rising prospects of a tightening market after last week’s Organization of the Petroleum Exporting Countries (Opec) agreement to cut production gave speculators impetus to increase bets on higher prices.
Oil prices jumped about 3% yesterday, with Brent hitting one-year highs, after Russia said it was ready to jointhe Organization of the Petroleum Exporting Countries (Opec) in curbing crude output and Algeria’s oil minister said he expected similar commitments from other non-Opec producers.
Organization of the Petroleum Exporting Countries (Opec) will stick to its policy of unfettered production after members failed to agree on a new output ceiling, but ministers were united in their optimism that global oil markets are improving.