US Energy Secretary Rick Perry says he is concerned that the OPEC deal agreed to on Saturday may not be enough to relieve global oil markets. The cartel, along with oil supply cut participants, agreed to boost their production by a combined 1 million b/d. OPEC photo.
Oil prices down on Monday after OPEC deal reached Saturday
On Monday, US Energy Secretary Rick Perry said that the deal reached by OPEC and other oil producing countries, including Russia, may not be enough to cover crude supply shortfalls that are stressing oil markets.
OPEC along with non-cartel countries agreed on Saturday to increase their production by 1 million barrels per day (b/d), or about 1 per cent of global crude supplies. The move came after major consumers, including China and the United States, urged the group to boost their output to keep oil prices low.
On Monday, oil prices slipped slightly. US WTI was down 21 cents to $68.37 and Brent crude fell 71 cents to $74.61/barrel. The Canadian Crude Index bucked the trend and jumped $2.30 to $44.47/barrel.
Oil prices rose substantially on Friday after OPEC itself agreed to boost supply.
“Obviously we’ve got a market that is stressed from a standpoint of supply,” Secretary Perry told Reuters. The jump in oil prices on Friday showed the deal “may be a little short” of what is required.
Some producers in the Permian Basin are struggling to get their crude to market as pipelines are nearing full capacity. Crisis in Venezuela has severely impacted the South American country’s ability to produce and export crude and political turmoil in Angola is also hampering production.
As well, the Trump administration’s decision to reinstate sanctions against Tehran means there will be less crude from Iran available on the market.
With United States voters heading back to the polls for the mid-term elections in November, Perry said the US will do all it can to keep gasoline prices down.
According to Reuters, Perry added that the Strategic Petroleum Reserve should be only used for supply emergencies and not as a means of manipulating the market. To balance the federal budget, a number of sales of crude from the US reserve has been mandated.