Oil prices were captivated by the Middle East last week. For example, a solid performance by OPEC resulted in a higher oil price. Although the fire was further stoked by Israel's announcement that a large-scale war with Lebanon is imminent.
The price of oil continued the correction. On Thursday, June 13, oil traded at $82,75 per barrel. On Tuesday, June 18, the price rose to the highest point of the week. On that day, the oil price rose to €85,33. On Wednesday, June 19, the price had dropped slightly again, to $85,15.
The oil market has been quite volatile again in recent weeks. Two weeks ago, oil was still trading at €77,52 per barrel. The price of oil fell sharply after oil cartel OPEC+ unexpectedly opened the door to a slight increase in oil production from the fourth quarter. This is a compromise with the United Arab Emirates. That country is the leader of a camp within the cartel that would rather produce more oil than aim for higher prices.
Russia and Saudi Arabia manage oil prices
The oil price is now 9,8% higher again. Once again, OPEC and its members are setting the trend. For example, the cartel expressed the expectation that the demand for oil will increase in the second half of 2024. In addition, Russia and Iraq have agreed within the cartel to reduce their oil production back to OPEC standards. In recent months, both countries produced more than they had agreed upon in the cartel, raising the question of whether the cartel still had control over its members.
In addition, the two most important members, Saudi Arabia and Russia, managed to push the price up again after they indicated that they still wanted to aim for a higher price. Both countries have cut their own oil production since 2023, as OPEC was unwilling to commit to lower targets. For a moment, Russia seemed to want to break the line, as the effects on the market are relatively limited compared to the loss associated with lower exports. The countries now speak with one voice again. By the way, that is not the only reason that the message sent oil prices higher. The countries have hinted that they are prepared to further reduce oil production in the future in order to increase oil prices.
Geopolitical tensions
In addition, geopolitical tensions are once again creating momentum. The conflict in Gaza in particular is driving up oil prices, as further escalation into a regional conflict seems imminent. Israel has approved a plan for a so-called full-scale war in Lebanon. Israel decided to do this after Hezbollah filmed weapons factories and missile defense guns, as well as shopping centers and residential areas. Israel's Foreign Minister Yisrael Katz indicated on X that he saw the recordings as a threat. The minister indicates that he wants to destroy Hezbollah. In addition, Katz expresses the aim of hitting Lebanon heavily.
The price of diesel rose this week to the highest point since mid-April. On Thursday, June 13, diesel was traded for €127,85 per 100 liters. On Tuesday, June 19, the price rose sharply to €131,33.