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Oil Prices Creep up Despite OPEC Production Increase

June 12, 2018 at 16:29 by Matt Jackson

Oil prices have crept up today, Tuesday, despite news that OPEC had increased its production, despite the fact that supply from Venezuela, Libya and Nigeria had decreased. OPEC nations are due to meet on June 22, when they will discuss whether to further increase output above current levels or stick to their existing pledge to curb global supplies; a move that they took in order to increase oil prices.

Proposed sanctions against Iran and Venezuela have caused concern over future supply. The market has reacted to a potential fall in supply levels, with oil prices reaching $80 a barrel before slipping back down to their current levels. Prices have been pegged back by news that the USA unofficially asked Saudi Arabia to increase their output levels, above the mark they agreed with the rest of OPEC back in 2017. Prior to this, there had been a suggestion that they would extend the arrangement beyond the end of 2018, its current expiration date.

US President, Donald Trump, has taken a hard stance against Iran, withdrawing from the nuclear deal, and Venezuela, following the controversial re-election of President Nicolas Maduro. Trump has even threatened tariffs against countries that continue to buy oil from Iran, causing a degree of panic in the market. He has also accused OPEC, and Saudi Arabia in particular, of artificially controlling oil prices; an accusation that Saudi Arabia rubbished. However, despite any conflict over the issue, recent oil production figures suggest that the Middle Eastern oil producing nation has listened.

According to OPEC’s recent monthly report, total output has increased by 35,000 barrels per day. OPEC currently restricts supply by 1.8 million barrels per day, so there is still a lot of room for movement.

WTI crude rose 0.42% to $66.38 while Brent crude dipped slightly (0.05%) to $76.42 at 17:00 GMT.

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