On Monday, the 1st of July 2019, OPEC+, an alliance of OPEC nations, Russia and other crude oil producers had reached an accord to extend their crude oil output cut until March 2020, as the members of the groups gave up their differences to prop up crude oil price amid a slowing global economy pulling crude oil price downwards alongside an inventory boost in United States.
Latest OPEC+ move would likely to spur tensions between Saudi and its western ally United States, as US President Donald Trump had recently offered US military support to Riyadh in its standoff with Iran and Yemen in exchange for a lower crude oil price.
As a matter of fact, Benchmark crude oil future prices rose more than 25 percent this year, after United States had put a sanction on Venezuelan and Iranian heavy to medium grade hydrocarbon aimed at crippling the oil dependent nations’ economy.
While OPEC kingpin Saudi and Russia and had been slashing output since late 2017 amid rising US inventory to prop up crude oil price, crude demands had been a latest headache amid a slowing global economy and an escalated tariff warfare between United States and China.
When an extension of OPEC+ supply cut would likely to increase gasoline price, a key issue for US President Donald Trump as he seeks for reelection in 2020, an analyst of Black Gold Investors, Gary Ross said, “Saudi Arabia is doing its best to achieve oil prices at $70 per barrel despite what Trump wants.
But they haven’t accomplished that even with Iranian and Venezuelan oil exports dropping. And the reasons for that are weak demand and U.S. shale growth”.