(New York = Yonhap News) Reporter Yoon Young-sook of Yonhap Infomax = New York oil prices rose as Saudi Arabia alone decided to cut additional production.
On the 5th (local time) at the New York Mercantile Exchange, the price of West Texas Intermediate (WTI) from India in July closed at $72.15 per barrel, up 41 cents (0.57%) from the previous day.
Oil prices rose for the third consecutive trading day. The three-day advance rate reached 5.96%. The closing price on this day is the highest since May 26th.
Oil prices rose after Saudi Arabia announced it would cut production by an additional 1 million barrels a day while oil-producing countries maintained their policy to cut production. At midday, it rose to a high of $75.06, up 4.6% from the low, but as attention was drawn to the fact that Saudi Arabia’s lone move could mean a split in the oil-producing countries’ advisory body , the increase in oil prices were reduced.
The previous day, OPEC+, a consultative body of major non-OPEC oil producers such as OPEC and Russia, announced that the current deadline for cutting production would be extended until the end of next year.
In a press conference that followed, Saudi Energy Minister Abdulaziz bin Salman announced that only Saudi Arabia would cut production by an additional 1 million barrels per day starting in July.
Saudi Arabia already announced last month that it would voluntarily cut oil production by 500,000 barrels.
Russia, which has been voluntarily cutting 500,000 barrels of crude oil since March this year, plans to extend the policy until the end of next year.
The result of this meeting is the direct expression of different messages between Saudi and Russian officials.
Earlier, Saudi Arabia’s energy minister warned short sellers to “beware of speculators,” raising the possibility of further production cuts by oil-producing countries.
However, after the Russian side insisted that there would be no additional production cuts, it was confirmed that there was a difference of position between Saudi Arabia and Russia within the OPEC+ oil producing countries.
In the end, Saudi Arabia went ahead with further production cuts only to maintain high oil prices, which raised oil prices. It is known that Saudi Arabia can avoid a fiscal deficit only when oil prices remain above $81 per barrel.
OPEC+ members previously agreed to cut production by 2 million barrels per day in October last year, and in April, some members surprised the market by announcing a voluntary additional production cut of 1.6 million barrels per day.
“Saudi Arabia will continue with massive production cuts in the hope of reversing the decline in oil prices, but given that benefits for some members come at the expense of others, additional extras within the cartel will emerge in the coming months,” said Ipek Ozkadesskaya, an analyst at Swissquart Bank. This suggests that cracks can occur.”
He therefore pointed out that the deal “is not a win-win situation for OPEC and the oil bulls.”
ysyoon@yna.co.kr
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This article was submitted at 04:00, 2 hours earlier on the Infomax financial information terminal.
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