Oil Holds at Near 11-Year Low on Weak Demand, Growing Supply
Oil prices steadied on Tuesday, hovering near 11-year lows, amid increasing pressure from a growing oversupply and slow global demand. Iran is preparing to boost its exports, while Saudi Arabia shows no sign of changing its oil policies.
Brent and U.S. crude prices inched up 3% on Monday, trading below $37 a barrel. Brent hovered near its 11-year low of $35.98, which was reached last week.
Both Brent and WTI crude are down over two thirds since prices started dropping in June 2014 amid the U.S. Shell oil boom and OPEC’s decision to continue pumping near-record volumes of oil to push out higher-cost rivals.
Saudi Arabia announced its plan to reduce its record-high $98 billion deficit in the form of spending cuts, increased taxes and privatization, and energy subsidy reforms. The plan does not signal any near-term changes to energy for the country’s foreign exchange policies. Iraq and Saudi Arabia have added extra barrels to the market throughout the year, as production exceeded demand by over 2 million barrels per day at times.
The supply glut is expected to continue in 2016, as Iran has pledged to add an additional 0.5 million barrels per day into the market once Western sanctions are lifted.
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