Sketchy deal

Sketchy deal

News:

1. The Organisation of the Petroleum Exporting Countries (OPEC) recently agreed to increase its daily output to address the problem of rising crude oil prices.

Important facts:

2. Saudi Arabia’s Energy Minister announced that the cartel’s output would be increased by about a million barrels a day beginning this July.

3. However, there is no official numbers regarding the planned increase in production.

4. In the absence of any clear intent on the part of OPEC to guide prices lower, the price of the benchmark WTI crude increased by 5% after announcement.

5. OPEC members had in late 2016, agreed to a historic deal to cut output by 1.2 million barrels a day in order to end a supply glut and raise the price of oil.

6. Since then, the cartel has managed to overshoot its production cut target following unexpected outrages in countries such as Venezuela and Libya, contributing to the steep rise in oil prices.

7. The lack of any clear commitment from OPEC to raise production suggests that the threat of a supply shock still looms over the global economy.