Middle East escalations drive up oil prices, influence OPEC+ decisions
3 Min Read
Russian Deputy Prime Minister says that OPEC+ takes into consideration geopolitical factors when making decisions on oil output.
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A huge jet of flame bursting from an oil platform lights up the sky in the United States, in 2019 (AFP)
Russian Deputy Prime Minister Alexander Novak stated on Wednesday that global oil prices are increasing partly due to the heated situation in the Middle East, which has recently seen significant escalations, most notably an Israeli military strike on the Iranian consulate in Syria.
Novak also pointed out that OPEC+ takes into account the geopolitical factors before making decisions regarding oil outputs.
On Tuesday, the worldwide oil price surged to its highest point in seven months. The event was driven mainly by concerns that supply could be restricted due to increasing tensions in the Middle East, continuous Ukrainian attacks on Russian oil refineries and reserve sites, in addition to the Yemeni Red Sea operations.
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"In my opinion, the current increase in price that we've seen in the last few days is really due to the market's reaction to the situation in the Middle East, among other things," he said in a press briefing
"As for the balance of supply and demand, the situation is stable and we will continue to monitor this," continued.
Earlier today, the OPEC+ Joint Ministerial Monitoring Committee (JMMC) suggested maintaining the current oil output quotas.
Talking to Rossiya 24 broadcaster, the Russian official said that the Middle East situation's impact on the market is evident, and should be addressed as such.
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"We discussed the situation in the market as a whole, the factors that affect the balance of supply and demand in one way or another, including economic growth," Novak said, adding that "these are the triggers that we see today in the Middle East, the tense situation, one way or another, it affects the market."
"We see this today, including the market situation reacting in the price factor. Prices have already risen to $89. Literally today. Therefore, this is a standard situation when the market reacts, including to geopolitical factors."
This official added that the OPEC+ group has verified that the tools and strategies currently in place to stabilize the market are effective.
Read more: Ukraine strikes on Russian energy infrastructure 'frustrating' US: FT
"A regular meeting of the monitoring committee was held today. The results of the work for January-February were summarized. We have confirmed that the tools that we previously used to balance the market are working, and within the monitoring framework we will continue to make the necessary decisions to ensure the stable operation of the global market," Novak said.
The World Bank has warned last October that the Israeli war on Gaza may push global oil prices as high as $157 per barrel in extensive interruption.
Despite the fact that the world economy is currently doing better than it did in the 1970s, the World Bank issued a warning that the conflicts in the Middle East and Ukraine may force the world's commodity markets into uncharted territory.
