Crude oil prices are soaring amid supply disruption in the global market. The benchmark Brent Crude oil Futures rose from the level of $71.20 (Dayâs low on 18th April 2019) to the present level of $74.4 a barrel. The WTI Crude also rose from the level of $63.46 (Dayâs low on 18th April) to the present level of $66.10 a barrel.
The factor which contributed to the rally of crude prices is the supply shortage in the global market, generated through various events and factors.
The pioneer factor in the oil-rally is the voluntary production cut of OPEC members to support their respective economies. The domestic economic conditions of the consortium depend on the high crude prices, which in turn, led the OPEC member to cut the production to support the crude oil prices.
However, the high prices are now prompting OPEC members to raise additional economic resources and deviate from crude dependence. The deviation coupled with high prices in the international market could further prompt the OPEC members to restore the production to the normal levels, and market participants are eyeing on the upcoming OPEC meeting in June and their stance on production.
Another factor which catapulted the oil prices in the market is the United States sanction on oil exporting countries such as Venezuela and Iran. The U.S. president Donald Trump exerted the ban on export from Venezuela to throw the countryâs president, Nicolas Maduro, out of the power, and replace him with the opposition leader, Juan Guaido, which was in line to address the Venezuela Crisis.
The U.S. Sanctions on the country marked a decline in export from Venezuela, which further widened the supply gap caused by the OPEC production cut, and in turn, supported the crude oil prices. The recent civil war in Libya also provided push to the crude oil prices.
Apart from the ban in Venezuela, the United States exerted ban on Iran oil export as well, to curb the Tehranâs nuclear ambitions, which in turn, marked a decline on imports of Iranian oil in the United States.
In the absence of the U.S., the Iranian oil found its way to various oil importing countries such as Indian, Vietnam, etc. The United States initially provided a waiver, on the export of oil from Iran to the countries importing the oil from it, which in turn, exerted slight pressure on oil prices and the oil prices hovered around $70 mark for quite some time.
However, in the recent event, the United States mentioned that the waiver provided by it would end on 1st May 2019, which in turn, created a supply panic in the market, and coupled with high energy demand supported the crude oil prices.
The end of the import waiver marked a loss of supply from a significant oil exporter in the global market, which in turn supported the crude oil prices.
The high energy demand coupled with a significant rise in crude oil prices led the S&P/ASX 200 Energy (sector) index up on the Australian Stock Exchange; many energy stocks outperformed. However, the share prices of Whitehaven Coal Limited plunged by 1.21% as compared to its previous close to mark a close of A$4.410.
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