On Monday, Brent oil prices increased to over $69 per barrel. The gains follow OPEC’s move to withhold oil supplies and growing tensions in the oil-rich Middle East region.
The increases are despite the heightened dispute between the U.S. and Iran and trade war between the U.S. and China as well as the general malaise in the global economy.
Brent crude, the global oil price benchmark, gained 29 percent for a part of this year majorly attributed to the U.S. government imposed sanctions and also willing supply cuts that OPEC decided together with other suppliers.
Compared with last week’s results where Brent had a 4.5 percent decline, the new week begins with gains of 33 cents, rising to $69.02 per barrel. The U.S. Texas Intermediate crude declined to $58.33 per barrel, a drop of 30 cents.
The two crude contracts last week experienced what they called the biggest weekly price drop witnessed this year. Due to public holidays on Monday in the U.S. and Britain, participation was affected resulting in low demand.
On Friday, Washington reported that it intended to send additional soldiers to the Middle East. The announcement comes amidst the continued tension between the U.S and Iran. However, no much market impact has been felt as a result according to analysts.
The Chinese Industrial companies posted a decline in profits for the month of April. This has raised concerns over the stability of the economy globally. There was also an abnormal decline in demand for the U.S. made capital goods.
Supply has further declined after the U.S. imposed restrictions on OPEC members Venezuela and Iran banning them from exporting crude oil.
Kuwait’s minister of oil said that the market was set to stabilize as the year drew to closure. From this statement, it is evident that OPEC has no intentions to solve the limited supply issue any time soon even as the mid-year meeting for price reviews is approaching. Consumers ought to adopt a supply and demand balance in order to keep up with the limited supply. Prompt delivery prices of crude oil are quite above the future dispatch prices to deal with the near-term shortage.