Oil soars 5% amid a future meeting of energy ministers
On Tuesday, crude oil surged as energy ministers of the Saudi Arabia and Russia met in Qatar in order to discuss production, thus generating rumors on a production freeze or cut.
Then, on the New York Mercantile Exchange, sweet, light crude oil futures for delivery in March grew 5.4% to $31.04. April Brent crude surged to $35.32, a 5.8% leap on London’s ICE Futures exchange.
Oil prices have dipped more than 70% since June 2014. They could have stayed low much longer unless a sudden production cut helped to trim down global oversupply. Key oil suppliers, OPEC members as well as other oil players including American and Russia weren’t willing to cut their output. It’s because they were simply eager to defend their hard earned shares in the market.
Saudi Arabia isn’t going to cut its production in order to restore the optimal demand and supply balance. Nevertheless, this country could consider output cuts on the condition other oil producers join.
Prices kept growing after sanctions against Iranian oil companies were imposed in the middle of January. Recently, Iran’s officials told the country had boosted its exports by 400,000 barrels a day, so global demand is drying up.