Oil prices plunge amid further concerns over slowing global economic growth

13 December, 2018, 22:55 | Author: Gerard Cortez
  • Secretary Rick Perry during a visit to Budapest

After the strong start, Brent futures ended just 23 cents, or 0.4 per cent, higher at $60.20 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 65 cents, or 1.3 per cent, to $51.65.

Crude oil prices jumped Friday after Opec, Russia and several other producers reach an agreement to cut output in 2019 to steady the market.

In December 2016, at a meeting of oil producers in Vienna, 11 non-OPEC countries, including Azerbaijan, agreed to cut oil production by a total of 558,000 barrels a day.

The move to cut 1.2 million barrels per day from the market was not easy, Suhail Mohamed Al Mazrouei, UAE minister of energy and industry and president of the OPEC conference, has revealed in a television interview with Bloomberg.

Authorities in Azerbaijan agreed to cut domestic production by 20,000 bpd, despite the country not being part of OPEC. Saudi Arabia, the de facto leader of OPEC, had been facing demands from United States president Donald Trump not to go for the output cut, as it would increase the oil price.

"We will wait and see to take a decision on extending the production reduction agreement after six months", he said.

"They also discussed the 2018 increase in Saudi oil production and the impact it has had on world markets in the wake of the Iran sanctions", the U.S. Department of Energy said.

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"We believe oil prices will resume their path back up to $70 average next year, potentially higher in the second quarter for a brief spell of time". The over-consumption of production in the market and predicting the decline in the world economy for the next year would have helped to reduce oil prices.

Iran maybe exporting around 1 million barrels per day now and any reduction may tighten the oil markets, especially around seasonally strong demand during summers.

Oil prices have fallen sharply since October on signs of an economic slowdown, with Brent losing nearly 30 percent in value.

According to the International Energy Agency (IEA), the demand for crude oil produced by OPEC countries at the world market is now at 31.3 million barrels.

Crude output has surged in the United States, set to end 2018 as the world's top oil producer, ahead of Russian Federation and Saudi Arabia.

No oil output cut decision was announced on Thursday after hours of a meeting of the Organisation of the Petroleum Exporting Countries (OPEC).

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