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Oil Prices Increase on Supply Boost Fears

June 18, 2018 at 17:52 by Matt Jackson

Oil prices have risen on Monday, as it has emerged that the expected oil production from OPEC nations will not be as high as previously expected.

OPEC has been expected to agree to relax its self-imposed restriction of supply, when the member nations and Russia meet on June 22. The countries have been restricting supply since 2017; a move they took in order to help support and increase oil prices from their previous lows. The deal was set to run until the end of 2018, but geopolitical concerns have seen many countries seeking for an increase in supply.

The USA has abandoned the Iran nuclear deal, and has threatened to reimpose financial sanctions that had been lifted as part of the deal. This not only means that the USA will cease buying from Iran, but they have also threatened that they will impose tariffs against European countries and companies that continue to buy oil from Iran. The USA has also threatened sanctions against Venezuela; a move that many European countries have supported because of the controversial reelection of President Nicolas Maduro.

Oil prices have been falling as a result of rumors that the oil producing nations that make up OPEC would agree to increase their supply. However, it was never a done deal. Iran, Iraq, and Venezuela, have all voiced concern over the possibility of lifting restrictions, stating that they would not be willing to increase supply.

Prices had continued to decline this morning, but reports emerged suggesting that the three nations would veto the move. The reports state that Saudi Arabia, Russia, and their supporters are now trying to negotiate a deal to offer an extra 300,000 barrels a day, rather than the 600,000 barrels that had been previously touted.

WTI crude prices rose a modest 0.38% to $65.31 while Brent crude rose more sharply, gaining 1.89% and reaching $74.83 per barrel by the end of Monday’s trading.

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