The global oil market has turned into a testing ground. Energy companies, cartels, and even countries are making efforts to experiment with oil prices. Currently, benchmark crude grades are especially sensitive to several fundamentals. Each of these factors arises from activities of the party, involved in crude exports.
OPEC is eager to rein in a supply glut through production curbs that is certainly bullish for oil prices. Top oil exporters have ensured balance between supply and demand. Moreover, some experts foresee supply shortage on the back of rising consumption. OPEC members are serious about extending the deal beyond 2018. Another market player, US President Donald Trump, is well-known for his unpredictable decisions. Thus, analysts find it more complicated to forecast the market. Trump was keeping investors in suspense after France’s President and Germany’s Chancellor had visited him in Washington and declared they were not ready to withdraw from the nuclear deal with Iran. Besides, the state leaders tried to convince the US President to retain the 2015 international agreement. Trump took a dramatic pause and made the opposite decision. He announced a decision to pull out of the deal and reimpose “the highest level of economic sanctions” against Iran. Interestingly, the sanctions will come into force in 180 days, but the oil market responded with an immediate rally.
Trump’s decision pushed oil prices to the levels seen in late 2014. Remarkably, investors are more encouraged by his statements, neglecting robust shale oil production in the US. Meanwhile, the US is ramping up oil output, having outpaced Saudi Arabia and competing with Russia. US energy companies are benefiting from the steady oil rally.
