Oil Peak 🛢

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Oil Peak

Oil has risen and risen since it went negative early last year, in fact recently it has risen so much that it has reached a six-year all-time high. To understand why you need to understand two things: supply and demand, and OPEC. OPEC is simply a group of countries (mainly in the middle east) that control around 40% of the world’s oil supply.

In this latest move for oil, and like all other moves made by the commodity, these two variables were at the root of the cause. This is because last week OPEC and its allies, also known as OPEC+ were going to vote on an output policy for the remainder of the year, if the policy were passed there would have been 400,000 additional barrels per day to the market each month from August through December, resulting in an additional 2 million barrels per day by the end of the year.

In other words, the price of oil would fall as the supply of oil would increase. Unfortunately for those looking for cheaper prices on gas, The United Arab Emirates (one of the countries in OPEC) rejected the proposal and talks have been suspended indefinitely. The reasoning behind this decision comes as the UAE’s Minister of Energy and Infrastructure Suhail Al Mazrouei who said “For us, it wasn’t a good deal” because while the UAE would support a short-term increase in supply, it wants better terms if the policy is to be extended through 2022.

All in all, it seems that oil negotiations are in somewhat of a pause at least until the next meeting occurs. But until then we will have to simply wait and see. What do you think about oil prices? And do you want them to fall or rise?

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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