Oil prices drop as US pumps more

CRUDE oil fell slightly yesterday on signs that the United States is continuing to add output largely counteracting the Organisation of Petroleum Exporting Countries, OPEC, efforts to cut production.

Cost of the United States light crude oil decreased $0.43 to stand at $52.75, while price of the Brent crude oil fell $0.46 to trade at $55.43. U.S. drillers last week added rigs for a 13th straight week, bringing it to its highest in roughly two years.

Moreover, investors are also putting money into the industry, suggesting U.S. output gains will continue. Increasing U.S. output is undermining attempts by OPEC and other major oil producers to curb output and sustain higher prices on oil market.

U.S. crude oil production reached 9.24 million barrels per day (bpd), according to the latest Energy Information Administration data, making it the world’s third-largest producer after Russia and Saudi Arabia.

Currently, OPEC, the average daily production of which by the results of the first quarter amounted to 32.02 million barrels per day, actually balances supply and demand.

Average daily production

Meanwhile, Iranian Oil Minister Bijan Zanganeh said that most of the participants in the agreement on the reduction of oil production want to extend it. Iranian official noted that the Islamic Republic supports the extension of the deal if other countries comply with its terms.

In addition, India decided to cut down the import of Iranian oil in 2017-2018 by about 20 percent. Nevertheless, Iran does not view this decision as a threat since India is one of Tehran’s most important customers. Due to the long period of low energy prices, the authorities of the oil states are trying to find other sources of income.

Thus, Saudi Arabia plans to develop 30 projects in the field of solar and wind energy to increase electricity production and reduce oil consumption, according to the Minister of Energy, Industry and Mineral Resources of Khalid al-Falih.

It is assumed that under this plan the world’s largest oil exporter will produce 10 percent of its energy using renewable energy sources. Since mid-2014, the oil market has faced an excess of supply over demand, which has led to a sharp decline in oil prices.

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