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Oil Prices Inch Higher Despite Rising Saudi Exports

Oil Prices Inch Higher Despite Rising Saudi Exports

Strong inventory draws this week…

Continuing Arab Gulf Spat Could Weigh On Oil Prices…Again

Qatar LNG

While oil markets were battered again this week over persisting oversupply concerns, the diplomatic crisis in the Middle East continued to brew, peaking when the Arab states boycotting Qatar issued a list of 13 demands to the tiny gas-rich country, which most analysts and insiders consider nearly impossible to meet.

Saudi Arabia and its several other Arab allies that severed ties with Qatar almost three weeks ago have issued a list of 13 demands to Qatar, giving their now-isolated neighbor 10 days to meet those demands, which include cutting ties with Saudi archrival Iran, and closing the Al-Jazeera TV network.

The AP obtained a copy of the 13-point list in Arabic just days after Saudi King Salman made his favorite son and Deputy Crown Prince, Mohammed bin Salman, Crown Prince, empowering the 31-year-old reformist as next in line to the throne in a move suggesting more hawkish Saudi foreign policy in regional conflicts. The new crown prince is also expected to adopt a harder line towards Iran, in what could be seen as a return of the political premium in oil prices.

So far, however, the markets were mostly focused on the global glut, what with U.S. shale production rising, OPEC’s output-cut-exempt Libya and Nigeria boosting production, and stubbornly high inventories despite the Saudi-led efforts to draw down oversupply.

Meanwhile, in the Middle East, Saudi Arabia, the UAE, Egypt, and Bahrain were drafting a list of demands for Qatar, about which U.S. Secretary of State Rex Tillerson said on Wednesday that “We hope the list of demands will soon be presented to Qatar and will be reasonable and actionable.”

Related: Macquarie: OPEC Deal To Collapse In 2018

According to diplomats and analysts briefed by Bloomberg and Reuters, the demands are severe, and Qatar is likely to reject them.

“The demands are so aggressive that it makes it close to impossible to currently see a resolution of that conflict,” Olivier Jakob, a strategist at Switzerland-based oil consultancy Petromatrix, told Reuters.

Qatar, for its part, has said that it would not negotiate while the neighbors are boycotting it, and would not give up what it believes are its own internal affairs.

Meanwhile, oil prices were tentatively looking up early on Friday, after having hit a 10-month low on Wednesday. At 1:27pm EDT, WTI Crude was up 0.21 percent at US$42.83, while Brent Crude was up 0.29 percent at US$45.35.

By Tsvetana Paraskova for Oilprice.com

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  • Naomi on June 26 2017 said:
    Saudi Arabia would like to steal Qatar's gas to balance their budget. Interesting that both Turkey and Iran came to the rescue. USA did nothing.
  • Rusty on June 26 2017 said:
    WTIC will be in the 20's by the end of summer. Great times indeed for the shorts.
  • Will on June 25 2017 said:
    Saudi is pushing for regional conflict.

    War in the ME in the next few months perhaps, if not sooner. Then you can forget about little trifles like US shale production.
  • Bob cook on June 24 2017 said:
    Close CNBC.....no loss at all.....
  • Ross on June 24 2017 said:
    It's not Arab Gulf illitrate! It's Persian Gulf!
  • Sean on June 24 2017 said:
    Close Al Jazeera? That seems crazy, imagine if they asked the us to close CNBC.

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