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Thursday, March 28, 2024

Oil is getting more expensive. Again, a barrel costs over $110

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The summit of G7 leaders once again shocked the crude oil market. Raw materials after falling last week again returned to levels above 110 dollars per barrel.

The previous week the crude oil market was dominated by supply, but since Friday’s session we have seen a recovery in the crude oil market. As a result, the price of WTI and Brent oil returned to levels in excess of $110 per barrel.

Oil prices react to the G7 summit

There is a lot going on in the energy markets earlier this week, especially in terms of politics. The G7 summit takes place on Monday and Tuesday to discuss key issues related to energy security and the diversification of the supply of raw materials, including oil, in the face of Russia, tied to the war in Ukraine.

One idea of ​​securing a greater supply of crude oil is to put pressure on OPEC countries to produce more oil. However, there are many indications that this will not be easy, not even for political, but for technical reasons. Many OPEC countries are struggling with internal problems that prevent them from increasing production. For example, there is a conflict of power in Libya, which means that the production or export of crude oil from this country is suspended from time to time. On the other hand, many other African countries, such as Nigeria, regularly experience infrastructure problems. Saudi Arabia and the United Arab Emirates are virtually the only countries with spare mining capacity, but concerns emerged this week that their capacity to increase production is slim.

Difficult negotiations with Iran

A separate category is Iran, which is not covered by the OPEC + oil agreement due to the sanctions imposed on this country by Western countries. However, talks are now underway to bring back the nuclear pact and potentially increase Iran’s oil production and exports. The country has a large production capacity and its return to the market would certainly reduce concerns about oil supplies arising from sanctions against Russia and pressure on Western countries to stop buying oil from this direction.

Source: ISBnews / Pavel Grubyak – Chairman of the Board, Investment Advisor Superfund TFI

Source: Wprost

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