Oil price bounces back: markets watch next OPEC+ meeting this week

 

Oil price that dipped last week, having been on a rising-mode for past few weeks, bounced back through the fog of uncertainty on Monday.

Traders are optimistic that the markets will not be flooded with crude oil as they first feared after the new US administration came into power; they were particularly worried about a significant contribution to the oil supply from Iran, as the latter has been boosting its production in hope of a breakthrough with the US on the nuclear deal.

That hope was dashed by Anthony Blinken the new Secretary of State, who recently said that an agreement with Iran was ‘long way’.

Although Iran sounds some conciliatory notes in recent days, a deviation from its hard-line stance, Iran’s entry into the markets as a normal player soon, is highly unlikely; Israel does not make that move any easier either.

OPEC+ meeting comes in the wake of significant rise in oil price since they announced production cuts in their last meeting in January this year; they may be in self-congratulatory mood, because it did the trick, indeed.

Some members, however, may not be in a mood to share the enthusiasm of the most prominent member, Saudi Arabia, in pursuing this strategy for long, while sensing the obvious risk – arrival of crude oil to the markets from non-OPEC members and of course, a potential shale boom.

Russia that opposed the production cut during the first meeting this year, but later reached a compromise, may still stick to its guns this time around too.

All in all, traders expect a much more moderate production cut and the rise in oil price clearly reflects that suppressing the other factors that used to play a major role too in the determination of the price.