Saudi Arabia: Oil prices hit over three-year high in May
May 31, 2018
Oil prices continued to climb in May on the back of limited supply, resilient global growth and rising geopolitical risks. Consequently, OPEC oil prices hit their highest level since November 2017 on 22 May. In the following days, oil prices receded slightly following Saudi Arabia’s comments on 25 May that Russia and OPEC could pump more oil in an attempt to stabilize the market. On 30 May, the OPEC oil basket traded at USD 75.2 per barrel, a 6.5% increase from the same day in April. The price was up 16.6% from the start of the year and was 54.4% higher than on the same day in 2017.
The U.S. decision to reimpose economic sanctions against Iran has the potential to reduce global oil supply at a time when countries participating in the oil cap deal are posting record-high conformity levels. According to the latest report from the Joint Ministerial Monitoring Committee, the 24 OPEC and non-OPEC producing countries participating in the voluntary production adjustments achieved a conformity level of 152% in April, up from 149% in March. Despite some signs that global growth may have peaked in Q1, particularly in some advanced economies such as the Eurozone, and fears of a full-blown trade war between China and the United States, the global economy is still in a good shape, boosting demand for oil.
Combined oil output among OPEC members rose slightly from 31.92 million barrels per day (mbpd) in March to 31.93 mbpd in April, according to the cartel’s latest Monthly Oil Report. The increase was mainly due to higher output in Algeria, Iran, Libya and the UAE. In contrast, crude output in Angola, Nigeria and Venezuela fell significantly month-on-month. Output in Saudi Arabia rose from 9.91 mbpd in March to 9.96 mbpd in April.