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Saudi Arabia’s Tough Stance Keeps Oil Prices North

By:
Olumide Adesina
Updated: Jul 6, 2021, 07:43 UTC

Crude oil prices pushed above $77 a barrel on Tuesday, after the oil cartel ended days of talks without a compromise thus bringing forth more curbs in crude oil outputs for next month, depriving the market of the much-needed oil with demand rebounding north.

WTI and Brent Crude Oil

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Talks collapsed momentarily when the United Arab Emirates (UAE) sought to boost its crude oil output against the Saudi’s strategy in keeping crude oil production limited with OPEC+ yet to agree on a date for its next meeting, further gave Oil bulls the firepower to aim for the $79 a barrel mark.

On the flip side, oil traders are concerned that such dispute could escalate into a price war as damaging as last year’s price conflict between Saudi Arabia and Russia, that led prices of the black fossil into negative territory for the first time in its history.

Such a narrative means the oil market will not be getting an increase for next month, energy market will be short of the much-needed oil barrels amid a strong economic recovery in play globally.

The energy market has tightened significantly with growing demand from developed markets that include the United States and China, draining oil inventories built up during the start of the worst viral attack in humanity.

The International Energy Agency in June further advised the oil cartel group in maintaining a more balanced approach with global demand accelerating toward pre-COVID-19 levels.

Oil bulls will definitely have much room for upsides with the weakening greenback and the present OPEC+ production limits, might likely push prices above $85 a barrel in Q3.

That being said, current shifts in volatility term structures after a surprising hawkish Federal Reserve in early June might mark a near-term top for oil prices.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. He is a Member of the Chartered Financial Analyst Society.

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