The oil price fell this week to its lowest point in more than four years. Sentiment has improved somewhat in recent days, partly due to negotiations between the US and China on the trade war and with Iran on a nuclear deal. In the Netherlands, the government is calling for energy efficiency during peak hours. And an operator of a wind farm in the North Sea is calling it quits.
The oil price reached $5 per barrel on Monday, May 60,23, the lowest point since February 2021 (during the corona crisis). At the time of writing (Wednesday afternoon), the board is back at $62,58.
Representatives of China and the US will meet in Switzerland later this week to negotiate the trade barriers that have been imposed on both sides. If the talks are successful, it could have positive consequences for the economies of both countries and the global economy. That prospect puts a floor under the oil price, although it remains to be seen what the outcome of the talks will actually be.
Last Wednesday it turned out that the American economy shrank slightly (-0,3%) in the first quarter of this year. According to analysts, there are more positive sounds about the Chinese economy and in Europe a slight profit growth of companies is expected, instead of a decline that was predicted earlier.
OPEC oil production increases, but declines in US
Eight OPEC+ countries (Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman) decided last Saturday to further increase oil production in June. Meanwhile, American oil companies are planning to cut back oil production due to low oil prices.
There are also concerns about oil supplies amid renewed tensions in the Middle East. Israel wants to occupy more (and possibly all) of Gaza. In response, Iran-backed Houthi rebels fired rockets from Yemen on Sunday at Israel's main airport near Tel Aviv. The Houthis - who also roam the Red Sea - have announced they will continue to attack Israeli airports. Israel has threatened the Houthis and Iran with counterattacks.
The weekend is also likely to see talks between the US and Iran on a nuclear deal. Late last week, after delaying negotiations, Trump announced via social media that he would impose sanctions on any country that buys oil from Iran. Easing existing sanctions could allow more Iranian oil to enter the market.
The decline in the gas price is coming to a halt. Although geopolitical tensions and the disappointing American economy are also putting pressure on the gas price, there is also great demand on the other hand. The gas reserves need to be filled. The Netherlands is lagging behind in Europe. Only a small 27% of the gas reserves have been filled according to data from GIE AGSI. In the EU as a whole, that is more than 41%. The temperatures have been relatively low in recent days, which has also led to a slightly higher demand. However, the mercury will rise above 20 degrees in the coming days.
There will also be plenty of sun, which means that a lot of solar energy can be generated. There is also a fair amount of wind. In the meantime, interest in building wind farms at sea is waning. Eneco previously announced that it no longer wanted to build new wind turbines in the North Sea, but today the Danish Ørsted announced that it would stop building the Hornsea 4 project in the United Kingdom, partly because of higher material costs.