Singapore: Owing to Organisation of the Petroleum Exporting Countries-led (OPEC) supply cuts and US sanctions on Venezuela and Iran, oil prices hovered around 2019 highs on Thursday, but could not rise further due to slowing growth in the global economy. A global economic slowdown was preventing prices from rising above the 2019 highs achieved this week, analysts said.
Crude oil futures of US West Texas Intermediate (WTI) were at US$ 57.33 per barrel at 0256 GMT on Thursday, 0.3 percent, or 17 cents, above their last settlement, but less than their 2019 high of US$ 57.55 attained on Wednesday. Six cents above their last close, International Brent crude futures were at US$ 67.14 per barrel, though they were not far off their 2019 peak, achieved on Wednesday, of US$ 67.38 per barrel.
In 2019, oil prices have been driven up by supply cuts led by OPEC, despite the slowdown in economic growth that broke out late last year. OPEC and other non-affiliated producers like Russia, decided to cut output by 1.2 million barrels per day (bpd) in late 2018, to put off a large supply overhang from growing.
US sanctions driving oil price up
Another factor that has driven the price up are the US sanctions against oil exporters Iran and Venezuela. “Although there is no lack of resources, there is an increasing lack of access to them,” Britain’s Barclays bank said of the sanctions on Wednesday.
The ascending oil production in US, having risen by over 2 million bpd in 2018 to a record 11.9 million bpd, has been the main factor keeping oil prices from rising even further.