Crude oil prices went up again after it became clear that the Organization of Producing Countries (OPEC) and its allies, known together as OPEC+, are planning a new contraction in mining next year. The decision is in response to the further increase in oil reserves and the rising US production.
Ministers from the OPEC countries meet at the end of this week in Abu Dhabi, where they will discuss the organization’s policy options in 2019, including the introduction of a further contraction in mining. This will end the six months of increased in supply. This is also a sign that US sanctions against Iran will not be enough to prevent surpluses from being generated in the United States.
The worries that pushed the price of crude oil to a four-year high last month began to evaporate after speculation emerged that the US would mitigate the impact of its sanctions on Iran to reduce fuel prices at home. OPEC has also committed itself to filling the gap.
The OPEC+ meeting also happens against a new peak in US shale oil production that threatens to bring a surplus on the markets in 2019.
If OPEC, headed by Saudi Arabia, decides on new mining cuts, the organization will have to face a number of challenges. The cartel will have to win back the support of its new partner – Russia. There is also a danger that the organization will irritate one of Riyadh’s main allies – the United States.
At the same time, the US production continues to grow. According to Washington, the country’s yield will increase at a record pace this year. The data from last week showed that US inventories are growing.