Global oil prices have risen for the first time in 2019, thanks to a wide array of global events. These include the supply cut by the Organisation of Petroleum Exporting Countries, OPEC, to political upheaval in Venezuela, as well as economic sanctions on Iran.
Brent Crude, which is the global benchmark for guaging crude prices, over the weekend rose to $66.78 per barrel. This is the highest level ever recorded of the benchmark since November last year when crude prices tanked.
In the meantime, prices have remained relatively unstable. Brent Crude, for instance, hovered between $66.78 and $66.65 per barrel before finally settling at $66.10 per barrel on Monday, February 18th.
Similarly, America’s West Texas Intermediate, WTI, is currently trading at $56.28 per barrel. This is also the highest level ever recorded since November 2018.
OPEC’s supply cut played a huge role
Recall that members of the Organisation of Petroleum Exporting Countries (OPEC) and other allies such as Russia, deliberated on possibly cutting down on production output as a way of stabilising the declining global oil prices.
When the supply cut eventually did take effect late last year, it was agreed that daily crude output would be 1.2 million barrels per day. This development has helped create some form of scarcity in the market, which in turn has helped to checkmate the reduction in prices.
Iran ban and political instability in Venezuela
Iran and Venezuela are two of the world’s biggest crude oil producers. But the two countries are facing challenges, challenges that have so far served to OPEC’s advantage because global crude prices keep rising.
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Recall that the US Government had last year imposed economic sanctions on Iran as part of measures to frustrate the Persian Gulf nation’s nuclear ambitions.
And now, the USA is also refusing to buy Venezuelan crude exports. According to Bloomberg, this is a deliberate plan aimed at forcing the country’s embattled President, Nicolas Maduro out of office.
“the u.s., venezuela’s biggest customer, is banning oil imports from the country as it condemns president nicolas maduro for fraudulently clinging to power after disputed elections. venezuela’s output is already at the lowest in decades as a spiralling economic crisis takes its toll on oil infrastructure.”