Let's Make An Oil Deal

Look out for oil and natural gas! Forget trading for the box where the lovely Carol Meryl stands! OPEC plus is going for the big deal of the day.

Saudi Arabia and Russia agreed to a 500,000 barrel a day production increase. Oil prices are soaring on the news because that was on the low end of what the market was expecting. Oil is also getting support from the fact that we're seeing little progress in the Iranian nuclear talks as reports say that the JCPOA talks are not expected to resume until at least next week and even then there's no definite meeting scheduled. It appears that the talks with the new hardline presidents are going nowhere and it is unlikely that we're going to get a deal anytime soon. So the market that was kind of thinking that OPEC might shock and awe us with a million barrel a day production increase has been disappointed. Those that expected to see a million barrels and more of oil coming from Iran are also going to be disappointed. So that is why we're seeing oil prices start so strong today. Also big news today on natural gas. We have a pipeline issue that could cause a significant spike in natural gas prices.

Photo by Timothy Newman on Unsplash

Just a year out from the price war, Saudi Arabia and Russia are now working very closely together to control the global oil markets. They found that working together works a heck of a lot better than it did when they were fighting and got into a production war. They also see a great opportunity to gain political power and make a lot of money and basically dominate the global oil market. With the world retracting from fossil fuel investment, now there is some talk that the agreement between OPEC and Russia is going to be extended another year. So it looks like they are getting very chummy and they like working together. There are some in the OPEC cartel that still thinks we might see a supply surplus in the second half of the year and that is another reason why OPEC plus is going to error on the side of tightening the market too much.

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