Oil price that dipped last week, having been on a
rising-mode for past few weeks, bounced back through the fog of uncertainty on
Monday.
Traders are optimistic that the markets will not be
flooded with crude oil as they first feared after the new US administration
came into power; they were particularly worried about a significant
contribution to the oil supply from Iran, as the latter has been boosting its
production in hope of a breakthrough with the US on the nuclear deal.
That hope was dashed by Anthony Blinken the new
Secretary of State, who recently said that an agreement with Iran was ‘long way’.
Although Iran sounds some conciliatory notes in
recent days, a deviation from its hard-line stance, Iran’s entry into the
markets as a normal player soon, is highly unlikely; Israel does not make that
move any easier either.
OPEC+ meeting comes in the wake of significant rise
in oil price since they announced production cuts in their last meeting in
January this year; they may be in self-congratulatory mood, because it did the
trick, indeed.
Some members, however, may not be in a mood to share
the enthusiasm of the most prominent member, Saudi Arabia, in pursuing this
strategy for long, while sensing the obvious risk – arrival of crude oil to the
markets from non-OPEC members and of course, a potential shale boom.
Russia that opposed the production cut during the
first meeting this year, but later reached a compromise, may still stick to its
guns this time around too.
All in all, traders expect a much more moderate
production cut and the rise in oil price clearly reflects that suppressing the
other factors that used to play a major role too in the determination of the
price.
