The oil market remains well-supplied, with the recent price rise driven
by geopolitics, not fundamentals, the Saudi and UAE energy ministers said
Thursday.

Even so, the ministers maintained “their commitment to security of
supply” and said they will continue to monitor market conditions, the
Saudi energy ministry said in a statement.

Saudi energy minister Khalid al-Falih and UAE counterpart Suhail
al-Mazrouei discussed the state of the oil market in a phone call
Thursday, according to the statement.

“The two ministers voiced their concerns about recent market volatility,
fueled by anxiety over geopolitical events despite the availability of
ample supply,” the statement said.

“They agreed to continue their consultations and to closely monitor the
oil market and vowed to work together and with other producers within
established mechanisms, as well as with major consumers to ensure market
stability.”

The two ministers are scheduled to be in Russia next week for the St
Petersburg International Economic Forum, and the statement said they
would meet on the sidelines of the event with Russian energy minister
Alexander Novak.

OPEC and 10 non-OPEC producers, led by Russia, are in the midst of a 1.8
million b/d supply cut deal that runs through the end of 2018.

OPEC will meet June 22 in Vienna, where the deal will be discussed, amid
speculation that the producer group may have to increase its output to
make up for any Iranian barrels that are shut in due to the US’
reimposition of sanctions. The sanctions, which target Iran’s oil
exports, go into effect November 5.

OPEC member Venezuela, whose production is already in decline, also faces
the prospect of additional US sanctions.

ICE July Brent traded Thursday as high as $80.18/b, the first time prompt
Brent has been above $80/b since November 2014.

–Herman Wang, herman.wang@spglobal.com

–Edited by Maurice Geller, newsdesk@spglobal.com

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