Friday 20 / September / 2024
Muscat: Oman’s crude oil prices fell to $37.81 per barrel on Monday, as reported by the Dubai Mercantile Exchange, after oil producers failed to agree on production limits.
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Experts, however, say the impact in the drop will not be significant in the Sultanate.
“I think prices will remain stable,” Suresh Kumar, research head at Al Maha Financial Services, told Times of Oman.
“Kuwait and the United States have cut down costs. Also, it is due to the supply and demand ratio. When production goes up, prices fall,” he said.
On April 13, the price of Oman Crude Oil Financial Contract, DME Oman, for June deliveries closed at $40.56 per barrel on the Dubai Mercantile Exchange (DME). DME Oman crude oil is a benchmark for pricing crude oil by those nations that produce it.
Saudi-Iran tension
Talks among Organisation of the Petroleum Exporting Countries (OPEC) faltered in Qatar after oil-producing countries failed to reach agreement over limiting production. Saudi Arabia announced it would not restrain its production unless other producers, including Iran, agree to a freeze. Iran, however, did not attend the meeting.
“Interestingly,” Kumar said, “Kuwait’s crude production dropped by more than half on Sunday, as thousands of its oil industry employees began an open-ended strike over the government plans to cut wages.”
“The output fell to 1.1 million barrels a day, which will help oil prices remain stable,” he said.
Price likely to rise
Kumar added, “The worst is behind us. From $26 the oil price rose to $40 and by this year we hope that it will be around $50 a barrel.” Others say the deadlock in the Qatar talks is bad news for all oil-producing nations.
“It is certainly bad news for all OPEC countries. The failure of reaching an agreement is depressing. In some sense, it will affect the global economy,” N. Gurumurthy, a Muscat-based financial expert, told Times of Oman.
He noted that OPEC nations are meeting in June to again attempt to decide upon a cap on oil production, and “one could only hope for some kind of breakthrough.”
“It looks like there is no end in sight where prices will stop,” he added.
Meanwhile, industry observer Joice Mathew, research head for United Securities, believes there is a chance that oil prices might again fall in the next few days.
“It may go further down to $35 to $36 a barrel. It could drop in the coming days. But we should look at many other aspects, as well,” he told Times of Oman.
“On Monday, there is a different contract (futures) coming up. Essentially, we will see new positions being created in a second contract, which might see oil touching to $42 a barrel again,” Mathew added.
