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Donald Trump claims that the OPEC should raise their daily oil production by 2 million barrels. During his interview to Fox News, he accused the oil cartel of manipulating oil prices.
According to Russian Minister of Energy Alexander Novak, the leaders of Russia and Saudi Arabia decided to extend the OPEC+ deal. The minister said that this decision to make the deal indefinite in time took place not so long ago in Moscow.
Saudi Arabia is reported to have raised oil prices for Asian and European importers. This is confirmed by Bloomberg.
The international market of crude oil seems to be in panic. Yet, the panic is snowballing. The reason for that is said to be the statement made by Russian Energy Minister Alexander Novak about the possibility of easing the OPEC+ deal in June 2018, which came as a surprise to the international trading community.
In March 2018, the United States outpaced Russia in terms of oil production. This means that the USA is now the biggest producer of crude oil in the world.
On Thursday, May 17th, Brent oil exceeded $80/b for the first time in 3,5 years. The last time the price reached this level was on November 25th, 2014.
On Tuesday, May 15th, Brent oil reached $79/b. Strange as it may seem, the Russian Ruble hasn’t reacted to this so far, even though this always has been a positive sign for Russia’s national economy and currency heavily reliant on crude oil prices. Moreover, the currency has been going slightly down for a while despite being backed by higher oil prices.
Right in advanced of the forthcoming OPEC+ summit some experts doubt that Russia is still interested in the agreement. The strategic objectives of the OPEC+ deal are almost reached. The imbalance in the global oil market has almost been eliminated. The cost of a barrel of Brent oil has increased by more than 100% since late 2016. At this point Brent oil is trading above 70 dollars per barrel. On Q1 2018, the OPEC made 400 million dollars a day more than 12 months before.
High oil prices have two sides of one coin. On the one hand, while oil producers are benefiting from today’s oil prices over $70/b, this seems to be creating an extra pain for oil consumers worldwide. What exactly has been happening to oil-producing economies?
As predicted by many experts, the OPEC+ agreement has been favoring American shale oil producers. The export of American oil to Europe has quadrupled. The thing is that the agreement between the OPEC and Russia-led non-OPEC oil producers pushed oil prices high enough to make American shale oil production profitable again.