Oil prices dropped this week due to IEA announcement

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Reuters London reported on August 12 that oil prices declined on Thursday following the IEA’s comment that the Delta variant of the Coronavirus would slow the recovery of global oil demand. 

The IEA’s predictions for the second half of this year have been revised upwards to account for some unforeseen changes. The organization predicts an increase in demand, which will help push prices back up and alleviate global tensions that were exacerbated by low inventories last month with a shortfall of 120,000 barrels per day (bpd).

The International Energy Agency recently announced their prediction revisions for the remainder of 2019. They believe that increased demand will lead to more stable oil supplies and higher prices over time – relieving tension at home as well as beyond our borders when looking around globally where countries are anxiously trying to keep pace or close gaps left from previous shortages caused by production slumps like those experienced earlier this year amidst production cuts imposed on OPEC members.

The OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries and others such as Russia, reached a deal last month that will restore some balance to global oil markets in near term.

The agreement calls for OPEC and non-OPEC countries to reduce output by a combined 1.2 million bpd to support prices. 

e latest comments from the IEA concern about the spread of MERS in South Korea, which has already claimed more than 30 lives since it was first diagnosed last month. Combined with ongoing fears over possible attacks on Saudi oil infrastructure, as well as Libyan exports that have been disrupted due to recent political upheaval in the region, this risk is contributing to pressure on global demand levels – especially when you factor in economic weakness across many regions globally where market volatility remains high (China & Emerging Markets) / sluggish growth rates are expected (Europe).

“But the scale could tilt back to surplus in 2022 if OPEC+ continues to undo its cuts and producers not taking part in the deal ramp up in response to higher prices,” they told Reuters.

OPEC+ agreed in July to boost output by 400,000 bpd a month starting this August. This is great news for the future of oil prices and will help ease oversupply until all 5.8 million barrels per day are phased out altogether.

The United States has called on the OPEC+ to raise oil output in order to help tackle rising gasoline prices and aid economic recovery. The meeting will be held on September 1st, so we will be awaiting developments.