Global oil prices have been strengthened by the expectation among market players that OPEC will extend its production cap at its 25 May meeting. The cartel is also likely to meet with non-OPEC members on the same day. High compliance with the cap among the cartel’s members, together with military intervention by the United States in Syria, has also supported oil prices. However, rising oil output in the US will remain a bearish factor.
Reports that Saudi Arabia wants to extend the output cap for another six months after June have boosted oil prices, even though the kingdom has made it clear talk of such an extension is premature. Meanwhile, Iran has said most OPEC members want an extension and that Tehran will back such a move. Also, the United Arab Emirates believes the global oil market is rebalancing, although this will take more than six months.
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