Oil prices have driven UK and European energy markets on an upward trend over the last month, as Brent Crude reached 4 year highs and breaching the $80/bbl mark. Geopolitical tension this year has saturated all commodity markets. The US and North Korea headlining, following by issues with the US-China trade deal. Meanwhile, OPEC members are producing low levels of oil, and have essentially rebalanced the market, causing a complete shift from an over-supplied market to once where supply is a concern.
The renewed US sanctions on Iran could put potential buyers off from making deals with the country. When sanctions were last imposed on Iran, oil production dropped significantly, so the same could happen again today, however there is nothing to suggest this at the time of writing.
Venezuela, also part of the OPEC group, are seeing a large drop off in oil production due to the ongoing economic crisis, whereby funding for the industry is minimal. Meanwhile, further reductions in production in Libya and Nigeria have decreased supply and led to increases in oil prices.
Increased US oil production lately has not done much to offset the decline in OPEC levels, though it is worth noting that US stock levels have increased. Additionally, it is suggested that oil exports from the US to Asia will increase over the last 6 months of this year, meaning the US are potentially stealing a share of OPEC market space.
Saudi Arabia and Russia have also increased oil production levels over the last month, most likely taking advantage of a higher oil price. Again this does not offset the declines seen across the rest of the cartel, and has had minimal impact. Market analysts are waiting on the next OPEC meeting scheduled to take place in June, and anticipate that some of the cuts to production will be renegotiated or potentially lifted.
Sources: BBC News, Reuters, Bloomberg, Energy Live News, Engie.