OPEC oil ministers meet to discuss global oil markets as Iran tensions escalate

OPEC oil ministers meet to discuss global oil markets as Iran tensions escalate

Saudi, Russian and other energy leaders meet in Jeddah today to discuss the oil market. This meeting comes ahead of

OPEC 1

Photo: Reuters

Saudi, Russian and other energy leaders meet in Jeddah today to discuss the oil market. This meeting comes ahead of an OPEC meeting scheduled for June 25.

Overshadowing the meeting is the influence US sanctions on Iran has had on oil prices. Following the imposition of sanctions on Iran, Tehran’s oil exports have reduced by 50%. This change in supply has already seen a 30% increase in oil prices this year to $72 per barrel.

Iranian supply is likely to further decrease as the US disallowed waivers that permitted China, India and other countries to purchase Iranian oil this month. It is expected that the sanctions will deprive up to 800,000 barrels per day from the international market.

The US is hopeful that Saudi Arabia will increase its oil output in order to fill the void. However in January, in order to counter reducing prices, Saudi Arabia along with other oil producers agreed to reduce supply by 1.2 million barrels per day for six months.

Despite the US pressure, expect Saudi Arabia to continue to resist increasing production. Expect oil prices to remain high.

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