Oil prices dropped on Monday afternoon at their lowest level of the year after the OPEC oil cartel and its allies said the plans to gradually increase gross production from April.
The opening of taps in countries such as Saudi Arabia and Russia, which have voluntarily strangled the offer to support prices, increases the risk that the world can soon be with more oil than it needs. The group said it would increase production by 2.2 million barrels per day, or around 2% of global demand, over several months.
This would be good news for consumers, who generally take advantage of it when energy costs less, but lead to the benefits of oil producers and countries and states they operate.
US oil prices set up at $ 68.37 per barrel on Monday, down 2%. At this price, it is generally profitable to unravel new wells in the United States, which produces more oil than any other country. Much more wells are no longer profitable when oil sells $ 60 per barrel or less.
OPEC Plus, the name used by the organization of oil exporting countries and allies like Russia, has been Say since December That a group of eight countries would begin to increase production in April. However, oil merchants took these declarations with a grain of salt because the cartel Delayed similar plans Several times last year, fearing that the supply of exceeding demand and depressing oil prices.
“The decision to move forward with a progressive production of production does not seem to be in response to a stronger demand than expected for their barrels, but rather in response to increasing political pressure, in particular the Trump administration,” a Barclays analyst, Amarpréet Singh, wrote on Monday in a note to investors. The move of OPEC Plus, he said, was a surprise.
President Trump has campaigned to reduce energy prices by at least half, a target that economists have says unrealistic. And in January, he said he was leaning on Saudi Arabia and OPEC To reduce the cost of oil.
“You have to make it fall, which, frankly, I am surprised that they did not do before the elections,” he told the World Economic Forum.
Oil producers can adjust their plans according to market conditions, OPEC said in a press release. “This flexibility will allow the group to continue supporting the stability of the petroleum market.”
