Crude oil futures rose Monday morning on the heels of a fortuitous performance throughout last week, as investor’s believe that oil prices are to remain on the rise. The oil futures were also affected by the news out of Saudi Arabia, where the Saudi cabinet pledged that they would put in significant effort to stabilize the oil market. When speaking on the matter, the Saudi cabinet said, “The kingdom (of Saudi Arabia) seeks to achieve stability in the oil markets and will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action.”
This announcement comes following a massive agreement involving Saudi Arabia, Russia, Qatar, Venezuela and other nations to cap their national production of oil at January’s levels in an effort to stop the free-fall of oil prices. Vladimir Putin, the President of Russia, met with officials from Russia’s top oil suppliers on Tuesday morning.Yet, the nation of Iran is insistent on increasing their oil production, making them the biggest obstruction to achieving stability in the market through global cooperation. Iran is so committed due to the fact that they have recently had their global economic sanctions lifted in January, and are trying to reclaim their market share.
Iran officials stated Monday that their nation had expanded their oil production greatly since the sanctions were lifted, with exports rising close to 1.75 million barrels a day. Iran’s increased output comes at a time when the oil market is already over saturated and demand is failing to meet the massive supply. Richard Gorry, director of JBC Energy Asia, spoke recently regarding the oil market in the United States, “There is still a lot of downside risk … but the U.S. crude market seems to have passed the worst point and crude runs should start creeping higher, taking pressure off inventory levels.”
Oil suppliers in the United States have reduced the number of oil drilling rigs for the tenth week in a row, which in turn brought the number of drilling rigs to its lowest count in over 6 years.