OPEC cuts 2019 oil demand amid concerns about trade tensions
PRICE Futures Group's Phil Flynn on the surge in oil prices after reports of an attack on two oil tankers in the Gulf of Oman.
OPEC on Thursday slashed its outlook for oil consumption in 2019, blaming international trade tensions for hurting demand for crude while also pointing to further challenges ahead.
In a monthly report, the Organization of the Petroleum Exporting Countries said world oil demand will increase by close to 1.14 million barrels per day this year -- 70,000 bpd less than initially expected. In the first quarter, demand increased by less than 1 million barrels a day. Output also fell in May, as a result of U.S. sanctions on Iran.
“Throughout the first half of this year, ongoing global trade tensions have escalated, threatening to spill over, and geo-political risks remained in many key regions,” the organization said in the report. “This has resulted in a slowdown in global economic activities, and weaker growth in global oil demand.”
OPEC, Russia and other major producers implemented a deal in early January cut oil output by a total of 1.2 million bpd. The outlook comes ahead of OPEC’s June 25-26 meeting, during which investors will be waiting to see whether the world’s major oil producers will prolong their supply cuts.
Oil slid into a bear market last week – its second of the year – with prices at one point falling as much as 5 percent, adding to May’s 16 percent slump. A year-long trade spat between the United States and China, the world's two biggest oil consumers, has dragged on prices this year.
But prices surged by almost 4 percent on Thursday after suspected attacks on two oil tankers in the Gulf of Oman.
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"We are aware of reports of an attack on ships in the Gulf of Oman," White House press secretary Sarah Sanders said in a statement. "The U.S. Government is providing assistance and will continue to assess the situation."