The oil price will also rise again this week. The reduction of OPEC+ production targets still seems to be very effective. In addition, disruptions in Iraq and Russia are causing a smaller supply. At the moment, the course seems to have turned around and the oil price is falling slightly. The most recent update from the US central bank (Fed) caused negative price pressure.
There is still an upward trend in the oil market. On Thursday, April 6, the trading price for Brent oil was $85,12. On Monday April 10, the oil price opened at the lowest point of the week. On that day, oil traded at $84,18. Two days later (Wednesday, April 12), the oil price reached its highest point of the week, at $87,33. This meant that the quotation of the Brent benchmark reached the highest level since the beginning of January.
So far, the production cut that OPEC+ announced a week and a half ago seems quite effective. At the beginning of April, the oil cartel decided to cut production by more than a million barrels per day. The decision came as a surprise, because less than six months earlier, the OPEC+ countries had already lowered their production targets by 2 million barrels. Since the decision, oil prices have risen from just under $80 to $87, an increase of more than 8% in less than a week and a half.
Although the production decline will not officially start until May, analysts note that Russia is already reducing its oil production. This week, Russian oil production fell by 1,24 million barrels per day. For the first time in eight weeks, Russian oil production fell below 3 million barrels per day. This first drop in production appears to be higher than planned. Moscow has indicated it will cut production by 500.000 barrels per day.
In addition, a conflict between the Iraqi government and the semi-autonomous Iraqi Kurdish region is causing a lower supply. Baghdad decided to halt oil exports between the Kurdish region and Turkey because the exports had not been approved by the Iraqi government. The impact of the decision is not small. Iraqi Kurdistan exported about 400.000 barrels per day to Turkey. Negotiations are currently underway between the Iraqi government and the Kurdish authorities about a restart, but so far no agreement has been reached.
Recession fears disrupt advances
The oil price is currently falling again. As is often the case this year, the fear of an American recession appears to be leading to a lower oil price. According to the US central bank (Fed), the aftermath of the recent banking crisis is likely to cause a mild recession later this year. In order not to make the recession worse than necessary, the central bank has chosen to implement fewer interest rate increases this year. Increases of 50 basis points also seem to be ruled out for the time being. In order not to hit the economy too hard, the bank is temporarily increasing interest rates by 25 basis points.
The higher oil price is not yet passed on in the diesel price. On Thursday, November 6, 100 liters of diesel traded for €117,42. Since then, the diesel price has fallen further. According to the last available quote (from April 12), the diesel price has fallen to €115,42.