Global oil prices to ‘stay volatile through 2017’

Global oil prices will remain volatile through the rest of 2017. That’s according to a new report from the Economist Intelligence Unit (EIU), which suggests factors such as rising US […]

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By Jonny Bairstow

Global oil prices will remain volatile through the rest of 2017.

That’s according to a new report from the Economist Intelligence Unit (EIU), which suggests factors such as rising US shale production and increased geopolitical risk across the Middle East could pull the market in different, unpredictable directions.

The Organisation of the Petroleum Exporting Countries (OPEC) has extended its production cuts until the end of March 2018 with the aim of maintaining the steadily recovering oil price.

However, a number of nations, including Saudi Arabia, exceeded oil and gas production limits in June, causing some concern in the industry that adherence is slipping.

As a result, June saw an average compliance rate of 78%, which the EIU says is still a good level but significantly below the 96% average seen between January and May.

The group says if any countries decided to leave the OPEC agreement, it could start a chain reaction and quickly depress oil prices across the economy.

One situation that could lead to this is the continued embargo of Qatar by Saudi Arabia, which the report suggests could potentially lead to a deterioration of Middle Eastern relations and collaboration with OPEC.

This could lead to a depression of prices as supply increases or a spike as Qatar’s rich Liquefied Natural Gas supplies see regional trade disrupted.