Saudi Arabia: Oil prices fall in May on escalating trade tensions and strong production in the U.S.
Oil prices declined in recent weeks following the rally in the first four months of the year. On 28 May, the OPEC oil basket traded at USD 67.4 per barrel, a 6.9% decrease from the same day in April. While the price was up 30.8% from the start of the year, it was 8.1% lower than on the same day in 2018.
In recent weeks, escalating trade tensions between China and the United States weighed on oil prices, owing to the effect they could have on global growth and thus demand for the black gold. Moreover, surging oil production in the United States, thanks to improved technological solutions to extract shale oil, has boosted global supply. This has outweighed U.S. sanctions on Iran, production disruptions in Libya and Venezuela and the successful implementation of the OPEC+ oil cut deal, which are supporting oil prices.
Combined crude oil output among OPEC members declined by 3,000 barrels per day month-on-month to 30.03 million barrels per day (mbpd) in April, according to the cartel’s latest monthly report. The reading mainly reflected much lower output from Iran offsetting stronger production in Iraq, Libya and Nigeria. Oil production in Saudi Arabia declined marginally to 9.74 mbpd (March: 9.79 mbpd).
On 25–26 June, OPEC+ are scheduled to meet in Vienna to discuss future production cuts. Although the current output cut deal expires at the end of June, OPEC officials have already signaled that an extension of the deal is the mostly likely outcome.