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Potential hike in OPEC, Russian output weighs on oil prices

Potential hike in OPEC, Russian output weighs on oil prices

Mubasher: Oil prices dropped in early Asian trading on Tuesday, pulled down by expectations that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC allies, led by Russia, will gradually step up crude production.

Brent crude futures LCOc1 dropped $0.29 to $78.05 per barrel (pb) from their last settlement, while US West Texas Intermediate (WTI) crude futures fell by $0.22 to $63.59 pb.

In 2017, OPEC and a group of non-OPEC producers began cutting oil supplies in a bid to end a global glut and increase prices. After achieving its objectives, the 13-country OPEC will meet on 22 June in Vienna to consider forward policy.

Oil prices will be volatile in the week ahead of the meeting, chief market strategist at futures brokerage AxiTrader Greg McKenna told Reuters.

“OPEC is fractured or fracturing,” McKenna said, adding that Iraq, Venezuela, and Iran seek to veto the potential decision of production rise.

In the same vein, the trade dispute between the world's two largest economies, the US and China, has taken its toll on global oil markets. The US and China have threatened tariffs on each others’ key export goods.

"If implemented, China may react to US tariffs by putting a 25% duty on US crude oil imports, which have been surging since 2017, to a business now worth almost $1 billion (£754.2 million) per month," according to the news agency.

While the US would face difficulties in finding a big market like China, Energy consultancy Wood Mackenzie noted.

By 7:31 am GMT, Brent crude fell 1.05% to $74.055 pb, while Nymex future crude dropped 0.96% to $65.22 pb.