Uncertainty in the crude oil markets has resulted in a 17% fall in crude prices over the last month. If the OPEC+ countries fail to extend their export limitation agreement through the end of 2019, the price decline could the U.S. boom into a bust almost overnight.
Khalid Al-Falih, Saudi Arabia's energy and industry minister, makes his way to a meeting during the Saudi-Japan Vision 2030 Business Forum in Tokyo, Japan, on Monday, June 17, 2019. Saudi Arabia hopes OPEC and its allies will agree to extend oil production cuts into the second half of the year at a meeting that will probably take place in the first week of July, according to Al-Falih.
Minister al-Falih's remarks only serve to add more uncertainty to a market that has already been plagued by that dynamic in recent weeks, as crude prices have dropped by about 17% over the past month. A series of unanticipated crude inventory builds have led to speculation that the market is currently over-supplied. That speculation was exacerbated late last week, as the International Energy Agency for the second half of 2019 by 100,000 barrels of oil per day .
The IEA forecast cut comes amid speculation that the ongoing tariff battle between the U.S. and China has resulted in a slowing of Chinese economic growth. Combine that with the ongoing collapse of production from Venezuela, disruptions of supply from OPEC members like Nigeria and Libya, and the series of attacks on crude tankers in the Persian Gulf and Gulf of Oman, and you have the most unstable market situation we've experienced in recent years.
Of course, the other major factor complicating decision-making for the OPEC+ nations is the ongoing oil boom in the United States shale plays, and the resulting increasing share of global demand being met by U.S. production. Following an unexpected drop during February, domestic production
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