Oil prices fall on rising Russian output and geopolitical tensions
Commodity Alert: Oil prices fall on rising Russian output and geopolitical tensions
Oil prices fell in morning in Asia amid rising Russian production and expectations that Saudi Arabia will cut prices of the crude it sends to Asia. There are speculations that Saudi Arabia will cut prices for all crude grades it sells to Asia in May to reflect weaker prices for its Middle East benchmark Dubai crude. Also putting pressure on oil markets is the rising supply. Despite the production cut agreement with the Organization of the Petroleum Exporting Countries (OPEC), top producer Russia pumped 10.97 million barrels per day (bpd) of crude in March, up from 10.95 million bpd in February, an 11-month high. Tensions between U.S. and Iran are supporting oil markets. U.S. President Donald Trump threatened to pull out of a 2015 international nuclear deal with Tehran under which Iranian oil exports have risen. And there is also the escalating dispute between the world’s biggest economies. China has increased tariffs by up to 25% on 128 U.S. products. China is also taking its first steps towards paying for imported crude oil in yuan instead of the U.S. dollar. A pilot program for yuan payment could be launched as early as the second half of this year. As the biggest importer of crude oil and the world’s largest energy consumer, China’s oil demand is a key determinant of global oil prices.