After a sharp rise more than a month ago, international oil prices have fallen again recently, forcing the Organization of Petroleum Exporting Countries (OPEC) to consider whether to cut production. Some analysts pointed out that since 2016, the international oil price has been affected by the game between OPEC, Russia and the United States and other non OPEC oil producing countries. Now these countries have different attitudes on increasing and reducing production, which may cause the oil price to continue to fluctuate and affect the world economy.
As the two "benchmarks" of international oil prices, the price of Brent crude oil futures in the North Sea on the London International Petroleum Exchange once fell below $65 on November 13, hitting a new low since March this year; The futures price of West Texas Intermediate Crude Oil (WTI) on the New York Mercantile Exchange fell below $55 on the 13th, a new low since November last year. From October 29 to November 13, WTI futures prices continued to decline, the longest decline since 1986.
The main reason why the international oil price fell into a bear market was that the supply of crude oil in the market increased significantly, especially the output of Saudi Arabia, Russia and the United States was close to or hit historical highs.
According to the monthly oil market report released by OPEC on November 13, the daily output of Saudi oil in October was 10.63 million barrels, which has exceeded the level when the joint production reduction agreement was reached in 2016; Russia's daily oil output reached 11.6 million barrels, the highest since the disintegration of the Soviet Union. According to the data of the US Energy Information Administration, the daily output of US crude oil reached a record 11.6 million barrels at the beginning of November.
Another reason for the decline in oil prices is that the sanctions imposed by the United States on Iran's oil exports are not as serious as the market expected. Although the US sanctions came into effect on November 5, they exempted 8 countries and regions, which means that Iran will continue to export more than 1 million barrels of oil every day. The increased output of Saudi Arabia and other countries exceeded the reduced output of Iran and other countries, which triggered concerns about the oversupply of crude oil in the market.
The international oil price dropped to a minimum of less than US $30 per barrel in 2016, and then OPEC and non OPEC oil producing countries reached an agreement on production reduction, prompting the oil price to start to rise. In addition, the market's concern about the sharp decrease in supply caused by the US blocking Iranian oil also pushed up the international oil price. At the end of September and the beginning of October, the price of London Brent crude oil futures once rose to the highest level since October 2014. Later, with the effect of increasing production of oil producing countries gradually appearing and the "boots landing" of US sanctions, international oil prices gradually fell back.
The trend of international oil price is largely related to the game of oil producing countries. On November 12, OPEC and non OPEC oil producing countries met in Abu Dhabi, the capital of the United Arab Emirates, to discuss oil production and prices. Khalid Farih, the Saudi Energy Minister, said that the delegates at the meeting agreed that the oil inventory should be prevented from rising. OPEC predicted in its monthly report that the global oil demand would increase by 1.29 million barrels per day next year, while the output of non OPEC oil producing countries would increase by 2.23 million barrels per day, which would lead to "the expansion of market oversupply".
Venezuela and Oman intend to support Saudi Arabia's production reduction proposal. Venezuela's oil minister said that Venezuela's goal in the first half of 2019 is to increase production by 1 million barrels per day, but if OPEC agrees to reduce production, Venezuela will cooperate. However, Russia is unclear whether to support the reduction. In December, OPEC and non OPEC countries will meet in Vienna, Austria. It remains to be seen whether the two sides can reach an agreement at that time.
Unlike Saudi Arabia, the United States is firmly opposed to production reduction. US President Trump shouted on social media that Saudi Arabia and OPEC should not cut production. In Trump's view, the lower the oil price, the better.
In the US, with the continuous development of shale oil, the US crude oil output may exceed 12 million barrels/day next year. The International Energy Agency said in a recent report that by 2025, one fifth of the world's crude oil and one quarter of the world's natural gas will come from the United States.
