Multiple factors push oil prices to new highs

Driven by multiple positive factors, international oil prices hit a new high on the 8th. Brent crude oil futures prices in the North Sea and West Texas light crude oil futures prices in the United States both hit their highs in the past five months.

West Texas Intermediate Oil, delivered on the New York Mercantile Exchange in May, rose 50 cents to $62.09 a barrel, the highest level since November 8, 2018. Brent crude for June delivery rose 37 cents to $69.38 a barrel.

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It is pointed out that the main factors driving up international oil prices include: market expectations that global supply will be tightened, the war in Libya continues to expand, the Organization of Petroleum Exporting Countries (OPEC) insists on reducing production, and the United States imposes sanctions on Iran and Venezuela.

Investors in the crude oil market are focusing on supply, Reuters reported. The current war in oil-rich Libya could disrupt exports; the eastern army pushed forward to the capital in defiance of global calls for a cease-fire.

In addition, Iran’s current oil exports have fallen by more than half, as the United States is considering tougher sanctions against Iran. Affected by the domestic political situation, Venezuela’s oil production has stagnated. Analysts believe that the reduction of oil supply in Iran and Venezuela will make OPEC’s production reduction plan, which came into effect in January this year, more remarkable. In March, OPEC’s oil supply reached its lowest level in four years, with Saudi Arabia, OPEC’s largest oil exporter, cutting production beyond the amount stipulated in the agreement. Saudi energy minister Falh said it was too early to talk about whether OPEC and its allies agreed to extend the cut, but the May meeting was crucial because the effect of the cut would be clearer by then.

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Russia, a big oil producer, has also convinced the market that OPEC and major oil producers want oil prices to keep rising. According to Singapore’s Lianhe Zaobao newspaper, Russian oil officials hinted on the 8th that Russia hopes to discuss oil production at a meeting with OPEC in June due to improved market conditions and declining oil inventories. Russia’s Special Envoy for the Middle East and Saudi Arabia, Dmitriyev, had previously said it was still too early to end production cuts, but he said on the 8th that there might be no need to reduce oil supply after June, indicating a significant shift in his position.

Some analysts point out that recent reports on US crude oil supply show that global crude oil stocks are declining, falling by about 1.2 million barrels in the last week of March. Besides the role of supply and demand, the reason also includes the good economic data of the two major economies of China and the United States. Traders also said that Genscape, a market intelligence firm, showed that crude stocks in Cushing, Oklahoma, where U.S. crude oil was delivered, fell by about 419,000 barrels last week. These factors have strengthened confidence in the oil market.