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World oil prices drop sharply

2 July 2018 17:33 (UTC+04:00)
World oil prices drop sharply

By Sara Israfilbayova

Crude prices sharply fell on July 2 after a significant increase in the past week, as a result of which the price increase since the beginning of the year was about 20 percent.

Market participants are concerned about the statements of U.S. President Donald Trump and the reaction of Iran to them.

Benchmark Brent crude oil fell $1.24 a barrel to a low of $77.99 before recovering to around $78.70, down 53 cents. U.S. light crude was down 5 cents at $74.10, Reuters reported.

The U.S. President said on June 30 that King of Saudi Arabia Salman bin Abdulaziz Al Saud agreed to a proposal to increase oil production within 2 million barrels.

Later, the White House reformulated the message, adding that Saudi Arabia “has a reserve of extraction of 2 million barrels a day, which can be used if necessary to stabilize the market.”

Meanwhile, Iran called on the OPEC countries to refrain from unilateral actions and threatened to break the agreement.

“Any increase in production by a member country above the norms established by the decision of OPEC will mean breaking the agreement,” says a letter written by Iran’s oil minister Bijan Zanganeh to the president of OPEC.

OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.

Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1, 2017.

OPEC and its partners decided to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.

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Sara Israfilbayova is AzerNews’ staff journalist, follow her on Twitter: @Sara_999Is

Follow us on Twitter @AzerNewsAz

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