Libya Clashes, Signs of OPEC-Russia Deal Fuel Oil Prices
Oil prices rose on September 19, following unrest in Libya and indications that OPEC and Russia are mulling an oil production deal.
Venezuela President Nicholas Maduro reportedly said the Organization of Petroleum Exporting Countries and Moscow are now working on a deal to limit oil production.
“Some form of cooperation and coordination on oil production between Venezuela and Russia are positive at least for market psychology – that’s why the price went up. We’ll see what happens,” London-based energy consultant Manouchehr Takin told New Europe on September 19. He noted, however, that the position of OPEC-kingpin Saudi Arabia is key in reaching any kind of deal that could include Iran and Russia.
“The market thinks that this excess oil in the market will gradually be controlled. But one has to always be careful because the supply is enough. About one or two million barrels per day is the excess supply flowing into the market and has been going into the stocks and inventories over the last two years. So even if the flow of oil into the market is reduced to be more or less the same as demand, still there is all this oil in the inventories. They have to make it so supply is less than demand so they have to use the oil from the inventories,” Takin said.
Meanwhile, fighting in Libya fueled oil supply worries. Takin highlighted the poor security and military clashes in Libya, which is affecting the African country’s oil exports.
Traders are watching an upcoming Federal Reserve policy meeting that will discuss interest rates. WTI was up at $44.03 a barrel on the New York Mercantile Exchange. Brent crude rose to $46.72 a barrel.