The trade war continues to weigh heavily on the oil market as forecasts paint a gloomier picture for oil prices with every passing week. This week, analysts have again revised downward their oil prices as they see an economic slowdown as a result of the trade war. OPEC’s over-compliance with the production quota and tensions in the Middle East over Iran's oil sanctions have been an insufficient catalyst for propping up oil prices.
OPEC Can’t Wait for the Trade War to Be Over
OPEC still finds itself in rather a tight spot wedged between Brent crude prices that are almost back to where they started at the beginning of the year and its own production throttling that has not packed enough of a punch to boost oil prices.
OPEC’s been down this road before. Remember the start of its production cuts in late 2016? Brent was trading around $56 at the time. One cut and two extensions later and we’ve gained $3 per barrel. But what has OPEC lost? Market share. Saudi Arabia’s, mostly - and were it not for Iran and Venezuela, Saudi Arabia would have had to cut a lot more as part of its “whatever it takes” promise.
But this perception of a global overhang in crude inventories has been too much for the cartel to manage successfully. The trade war, which most analysts agree will have a negative impact on the economy, is constantly pushing prices down while OPEC is trying to lift them up.
So now what? This tit-for-tat US-China…