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Crude Oil Futures Slump amid Political Tensions in Middle East

June 5, 2017 at 17:42 by Vladimir Vyun

Futures for crude oil dropped today amid concerns that tensions between some Middle Eastern countries, including several members of the Organization of Petroleum Exporting Countries, do not bode well for OPEC-led oil production cuts. Saudi Arabia, Egypt, United Arab Emirates, and Bahrain severed their relations with Qatar. Saudi Arabia, Iran, and Qatar are OPEC members. While Qatar itself is among the smallest producers in the organization, the rift between OPEC countries may hurt the coordinated efforts to reduce global supply.

Meanwhile, worries about growing supply from the United States persist. Baker Hughes reported on Friday that the US oil rig count rose by 11 last week. It was the 20th consecutive weekly increase. Now, the number of US oil rigs stands at 722 — the highest since April 2015.

Futures for delivery of WTI crude oil in July fell 0.55% to trade at $47.40 per barrel as of 17:37 GMT on NYMEX today. Contract for Brent crude subtracted 0.86% from its value to $49.52 per barrel on ICE.

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