ibusinesslines.com December 19, 2018

Crude prices slump as global economy crashes

28 October 2018, 10:01 | Kelvin Horton

Crude prices slump as global economy crashes

Crude prices slump as global economy crashes

Brent crude futures were down 51 cents, or 0.7 percent, at $76.38 a barrel by 0331 GMT. However, there has also been new concern among market players: that global economic growth may be slowing down and will continue to slow down, ultimately hurting oil demand.

However, there is an important distinction when it comes to Saudi Arabia.

Saudi Energy Minister Khalid al-Falih said this week, according to Russian news agency TASS, that the country would bump up its production to 11 million barrels a day to cool off the oil market, although some oil observers wonder if the kingdom would be able to fulfill this promise.

Oil futures rose mid-week as the focus returned to looming United States sanctions on oil exporter Iran, helping prices recover from a two-month low earlier in the week.

However, earlier this week prices fell sharply after the top Saudi energy official said the country had ramped up production and was working with both OPEC and non-OPEC members to make sure to cover any supply disruption. USA crude oil production C-OUT-T-EIA has risen steadily over the past decade and hit a record high of 11.2 million barrels per day (bpd) this month. Russian Federation is already pumping 10.8 million barrels a day of crude, a level unseen since the Soviet Union. The sanctions will take effect from 4 November.

"If equities are selling off, the public is taking a risk off stance, pulling in their wallets and moving from a risk-on, the global economic expansion, to a risk-off, for potential global economic contraction", John Thorpe, a commodity broker at Los Angeles-based Cannon Trading, told UPI via email.

The ISPR I, in partnership with ADNOC of Abu Dhabi, is for holding 5.33 million metric tons of crude oil, on a seven-year contract basis. You even have a report that the Chinese Government is telling China oil companies to stop buying oil from Iran, at least temporarily, because they want to use it as a barging chip in US trade negotiations with the United States. Cumulatively the value of oil imports from Iran between April and September 2018 more than doubled to Dollars 7.74 billion from USD 3.84 billion in the corresponding period past year.

U.S. crude CLc1 was down 60 cents, or 0.9 per cent, at $66.73. In recent weeks, the oil market has carefully watched growing strains in the U.S. -Saudi relationship over the killing of Saudi journalist Jamal Khashoggi. At long term with sufficient oil supply by major oil exporter Iran's role in world oil market may decrease, Iran needs to keep its share in regional and world oil market.

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