Opec willing to discuss oversupply of oil
The Opec has made the first move to start the recovery of the oil price. Will this mean that the seemingly endless period of low oil prices may reach its end?
Oil has been one of the most discussed investments in the last year. Ever since the price went down from its peak in June 2014, there have been speculations as to when the price would finally recover. Many thought it would be in 2017, but their prayers may be heard sooner.
The Opec has been looking at low oil prices long enough, it seems, and wants to put an end to the long Mexican standoff that has been going on. According to secretary general Abdullah al-Badri, finding a solution to this long period of oversupply is crucial.
The Opec is not the only one producing more than ever. Russia has also come close to production records in the past months, and as a result of shale drilling the US produces more oil than it has been for decades. Both these high production numbers and the Chinese economy causing worries among investors, caused oil prices to drop to their lowest point in over 12 years.
Although Al-Badri has his concerns, he also declared that there are signals the oil market may recover later this year. These signals are based on a daily decreasing production by 600,000 barrels per day, while demand is likely to rise by 1.3 million barrels per day.
The economic consequences of a higher oil price are especially positive for economically weaker countries, while Europe sees a stronger economic growth when oil prices are low. And of course, pumping petrol will be less fun once the oil price goes up.