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Cancelled OPEC Meeting To Keep Oil Prices Higher Until At Least June

by Paul

Industries hoping for a new slide in oil prices based on increased supplies have been left disappointed by the OPEC decision to cancel its scheduled April meeting. The organisation of most of the world’s largest oil producing nations has been under pressure to agree to an easing of supply restriction. USA President Donald Trump has been particularly vocal in pushing that agenda. It seemed to be working last Autumn as OPEC boosted output.

But the alliance is now pushing back over what it sees as a global oversupply having resulted from its loosening of the taps. Oil prices plunged from $85 in early October to lows of around $52 before the end of last year. They’ve seen picked back up to over $67 and OPEC appears keen to ensure they remain in that area. While higher oil prices mean greater overheads for industries with high fuel costs, low prices create economic pressure for many of OPEC’s members, whose economies are often heavily reliant on the income generated by oil exports.

Khalid al-Falih, Saudi Arabia’s energy minister announced the decision to cancel the planned April summit. A major factor said to be behind the delay of any decision on future production increases is reported as the desire by OPEC to assess what impact U.S. sanctions on Iran and Venezuela will have on the market over the next few months. Both have seen oil export embargoes placed on them, with the USA keen to see the shortfall balanced out by increased output from other oil producers.

However, with a major oversupply seeing oil prices crash to as low as $45 a barrel in 2017, OPEC are cautious. Before agreeing to ramping up output they want to see clearer evidence of exactly how much is necessary. They are wary that an economic slowdown in China spreading internationally could see demand fall significantly, meaning a supply increase could again mean prices plunging.

For those investing online, oil prices are one of the more significant factors than can impact the bottom line of companies, and subsequently share price. Energy companies, particularly those that produce and sell, or trade, oil and gas, benefit. Others for whom oil and gas is an overhead suffer. Airlines, transport & logistics companies, property companies, manufacturers that use plastics made from oil or have high energy costs all feel the pinch when oil prices rise.

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