The price of crude oil climbed further during Friday’s trading session to trade near the $70 per barrel price level which is the commodity’s biggest rally in the past three years due to the ongoing renewed outlook on the global production cuts led by the Organization of Petroleum Exporting Countries a deal which was extended until the end of the year.
Aside from the extension of the OPEC as part of their efforts to help curb global oversupply, the ongoing tension in Iran which happens to be one of the biggest oil producers in the organization with an estimated daily output of 3.8 million barrels which comprises around 4% of the overall global oil supply. The presence of the ongoing political protests in the country has caught the attention of the market.
Although the political protests didn’t affect the price movement of crude oil as well as the ongoing oil cuts, some investors and analysts have seen the possibility of the recent events influencing the market movement soon. Some have also specified the threat of a nuclear deal being reached between Iran and the United States.
The ongoing tension between Saudi Arabia and Iran which are two of the biggest producers in the organization has also concerned a number of investors following two ballistic missiles which were fired at the capital of Saudi in the past couple of months.
Brent crude oil prices are now at around $68 per barrel and have led to speculations that the price of brent will top $70 per barrel in the coming trading sessions. Crude oil prices have risen by almost 1% during the first trading session of the year. Last Tuesday, the U.S. West Texas Intermediate crude futures traded to as much as $60.12 per barrel which is the highest since mid-2015.
Oil prices were also higher as the markets digested news of oil supplies in Iraqi Kurdistan declining since October last year following the Baghdad's reclaiming of oil fields from disputed territories in the semi-autonomous region.
One of OPEC producers Venezuela has also reported a decline in its output to the lowest level seen since the past thirty years due to the rising economic crisis. Russia which is one of the non-OPEC participating countries in the oil cut agreement also has seen a decline of 5.3% in its crude oil exports to 5.24 million barrels per day back in December. Analysts have also seen a continuous oil price rally should the country keep up with its part of the output cut agreements.