ASSESSMENTS

Has a Bull Oil Market Returned?

Apr 19, 2018 | 21:52 GMT

An October 2017 image from an Iraqi oil field west of Kirkuk.

Oil prices have hit a three-year high, nearing $74 a barrel. Some news reports say Saudi Arabia would like to see prices as high as $100 a barrel.

(AHMAD AL-RUBAYE/AFP/Getty Images)

Highlights

  • Saudi Arabia and other major oil producers may reach their goal of reducing global oil inventories to their five-year average by the next OPEC meeting, scheduled for June.
  • With that part of the strategy complete, Saudi Arabia is seeing other reasons — including boosting the valuation of Saudi Aramco — to support higher prices.
  • But it's not just Saudi Arabia's strategy that has helped bring oil prices to their highest level since November 2014; structural factors that have leaned heavily on oil producers like Venezuela and the prospects for production in Libya and Iran have contributed to the higher prices.

A crude awakening may be no more. De facto OPEC leader Saudi Arabia is reportedly targeting oil prices near $80 a barrel -- or even $100 a barrel. It has emerged as one of the loudest price hawks among oil producers, though other OPEC producers have pushed back on the higher targets. This stance, along with a number of other factors, has helped boost oil prices to their highest level since the fateful OPEC meeting in November 2014 when Saudi Arabia refused to cut its oil production, opting instead to drive down the price of oil to curtail rising U.S. tight oil production. Oil prices flirted with $75 a barrel on April 19. On April 20, major oil producers will descend on Jeddah, Saudi Arabia, to discuss oil production cuts implemented last year to reduce oil inventories. During this meeting, Saudi Arabia is likely to outline its views about where...

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