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OPEC doesn’t want central banks around the world the start responding to inflationary pressure from oil prices above $70 a barrel. nor do they want U.S. shale investments to rise. so the cartel will try to talk oil prices down if Brent exceeds $70 per barrel in the coming days. according to Goldman Sachs.
At 09:32 a.m. on Wednesday. Brent Crude was up 0.41 percent at $69.10. just shy of the $70-a-barrel mark. after the American Petroleum Institute (API) reported a staggeringly large draw of 11.19 million barrels of United States crude oil inventories for the week ending January 5. marking six large draws in as many weeks. Robust global oil demand growth is also supporting oil prices. as well as geopolitical concerns out of the Middle East. most notably Iran.
OPEC would otherwise enjoy $70 oil. but central banks could intervene to temper inflation from the higher oil prices. and U.S. shale would grow more at that level. Jeff Currie. Goldman Sachs’ head of commodities research. said in a Bloomberg television interview on Wednesday.
“OPEC members do not want to see that.“ Currie said.
“In general we’ll probably see more noise and rhetoric if prices trade above $70 a barrel in the coming days to push this market back down to lower levels.“ he added.
Iran. Iraq. and Nigeria have already expressed concern that oil prices this high would give more incentive to rival oil producers outside of the production cut pact. most of all U.S. shale. to ramp up production faster than expected.
Brent at above $70 a barrel “will trigger some increased discussion within OPEC.“ Olivier Jakob. managing director at PetroMatrix. told Reuters.
According to Citigroup. this year many wildcards could push oil prices up to $80. and those wildcards include war. tensions in the Middle East. U.S. President Donald Trump. and North Korea.
