KT edit: Opec staying the course, but US actions a concern
Oil rose on Monday as Saudi Arabia said it would continue to support output cuts by Opec.
The US-China trade war has been unforgiving on the oil market despite China buying more of the commodity in August. Shipments to the world's biggest importer were up 3 per cent from July. On a more positive note they were 10 per cent higher in the first eight months of 2019 over the same period last year. But that may be small consolation when demand from other nations appear to be slowing as the global economy faces a downturn of sorts, with a recession predicted next year. But that's the worst-case scenario.
Propping up prices through supply cuts is considered the best short-term option and Opec has done well to stabilise the market. Saudi Arabia, the world's largest exporter of oil, has led from the front along with the UAE. Riyadh may have succeeded in its first task to raise confidence in Opec's ability to bring falling crude prices under control. The appointment of Prince Abdulaziz bin Salman, a royal family member and son of King Salman, is an indication that the kingdom will not allow the situation to drift out of control. Riyadh understands that regular and timely interventions are necessary as the US-China trade war shows no sign of abating. Prince Salman had previously worked on an agreement between Opec and non-Opec countries that included Russia, and he is the best man for job.
Oil rose on Monday as Saudi Arabia said it would continue to support output cuts by Opec. Prices have been climbing for four days now, and the UAE said it is "commited" to staying the course. UAE Energy and Industry Minister Suhail Al Mazrouei said that members of Opec and non-Opec producers should be on the same page. Geopolitical tensions with a Iran are also a concern. "The fear of slower (oil) demand is only going to happen if that tension is escalating and I am personally hopeful that is not the case," Mazrouei said. Wise words, but a lot will depend on the US that is not just seeking energy sufficiency but also dominance in the sector. Talk of a loose cannon that can negate all the good work done by Opec.