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Oil Prices Surge 1% Amid Supply Cut by OPEC

Author : Odisha Today Bureau | Posted on: 2019-01-16

Oil prices rose by around 1 per cent on Tuesday amid supply cuts led by producer club OPEC and Russia, although a darkening economic outlook may soon weigh on growth in fuel demand.

International Brent crude oil futures were at $59.62 per barrel at 0740 GMT, up by 63 cents, or by 1.1%, from their last close. Similarly US West Texas Intermediate (WTI) crude futures were at $51.14 per barrel, up by 63 cents, or by 1.3%.

 

The Middle East-dominated producer club of the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC allies, including Russia, agreed in late 2018 to cut supply to rein in a global glut.

 

In the United States, new oil production has dropped in early 2019, pointing to a potential dent in production growth which was at more than 2 million barrels per day (bpd) last year, bringing American crude output to a record 11.7 million bpd.

Meanwhile, the United States last November re-imposed sanctions against Iran's oil exports. Although Washington granted sanctions waivers to Iran's biggest oil customers, mostly in Asia, the Middle Eastern country's exports have plummeted since.

 

"Iranian exports have already fallen sharply and are likely to remain at around 1.3 million barrels per day (bpd) in 2019.

 

However, Japan expects to restart oil imports from Iran within this month, the Nikkei business daily reported on Tuesday. South Korea is already expecting to receive Iranian oil imports in January after a four-month interruption.

On the demand side, an economic slowdown is looming over oil and financial markets.

 

China's National Development and Reform Commission (NDRC) on Tuesday signalled it may roll out more fiscal stimulus measures to stem a further economic slowdown.

 

Tuesday's oil price increases came after crude futures fell by more than 2 per cent the previous session, dragged down by weak Chinese trade data which pointed to a global economic slowdown.

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