The cost of oil is steadily rising amid reports of a sharp decline in production in OPEC countries. In January, the oil cartel states executed a new deal to reduce production by almost 80%. This is the biggest drop in oil production in the last 2 years.
Saudi Arabia, the largest exporter of oil, has shown great diligence in this matter, having made much deeper cuts than promised. The Saudis followed the example of their closest allies – the United Arab Emirates and Kuwait, also making significant reductions. The effect of such a deliberate reduction intensified from an unintended decline in oil production in Iran, against which US sanctions were imposed, and Libya.
According to a survey of officials and analysts, production from 14 current OPEC members last month amounted to 31.02 million barrels per day, falling by 930 thousand barrels per day. Recall that OPEC +, which includes Russia, agreed to remove 1.2 million barrels per day from the market, compared with October levels, in the first 6 months of 2019. This agreement is clearly executed ahead of schedule and pushes the price of oil up. In addition, oil is becoming more expensive amid reports of a reduction in the number of drilling rigs in the United States.
As a result, oil prices are rising steadily. The April futures price for Brent on the London Stock Exchange ICE Futures is preparing to take a height of 63 dollars per barrel, and the contract for WTI with delivery in March at the New York Mercantile Exchange may outpace the mark of 55 dollars per barrel.