Oil resumes slide over Middle East issues
Oil prices hit by concerns that a political rift between Qatar and several Arab states would undermine an OPEC-led push to tighten the market.
Oil fell for a third day on Tuesday. Brent crude LCOc1 was trading at $49.27 per barrel at 0424 GMT, down 20 cents from its last close. That is down 9 percent from the open of futures trading on May 25 when an OPEC-led policy to cut oil output was extended into the first quarter of 2018.
U.S. West Texas Intermediate (WTI) crude CLc1 had dropped 18 cents to $47.21 per barrel. That is down about 8 percent from the May 25 open.
With oil production of about 620,000 barrels per day (bpd), Qatar’s crude output ranks as one of the smallest among the Organization of the Petroleum Exporting Countries (OPEC) but tension within the cartel could weaken an agreement to hold back production in order to prop up prices.
Leading Arab powers including Saudi Arabia, Egypt and the United Arab Emirates cut ties with Qatar. Steps taken include preventing ships coming from or going to the small peninsular nation to dock at Fujairah, used by Qatari oil and liquefied natural gas (LNG) tankers to take on new shipping fuel.
Analysts said that the current dispute goes much deeper than a similar rift in 2014. Persistent gains in U.S. production also dragged on benchmark crude prices.
Although Qatar is a small oil producer, other OPEC states could see such an action as a reason to stop restraining their own output, traders said.
Worries over the outlook for OPEC’s drive to rein in production come amid bulging supplies from elsewhere, especially the United States.
U.S. crude production has jumped over 10 percent since mid-2016 to 9.34 million bpd C-OUT-T-EIA, levels close to top producers Russia and Saudi Arabia.
Source : Reuters