Last Tuesday was one of the worst days for the oil market over the past year. Yesterday, for the first time since March, the cost of Brent black gold slipped below $ 65 a barrel, while WTI crude reached an annual minimum of less than $ 55 a barrel.
The formal reason for the collapse of quotations could serve as a monthly report of OPEC. The cartel revised upward the forecast for the extraction of black gold in the United States and worsened the estimates of global demand for raw materials.
As for the fundamental factors that could lead to sales, here, first of all, the White House's decision to allow some countries to continue buying Iranian oil should be noted.
Here, it is worth adding a sharp increase in black gold production in the United States. Only in the first week of November, the figure increased by 400 thousand barrels per day. Moreover, all this is happening against the background of expanding the production of raw materials in Russia and Saudi Arabia, as a result of which an excess of supply has been formed on the market.
"On the eve of the midterm elections, Donald Trump needed a political victory over Tehran to get the support of a conservative-minded part of voters. Initially, he promised to reduce oil exports from Iran to zero, but then changed his position, making an exception for several countries while imposing restrictions against the Islamic republic," the experts said.
"Now the oil bulls, like OPEC, are upset that the American president has misled them, and Iran reminds Saudi Arabia that such a scenario was quite predictable. Now, the cartel will either have to challenge Trump and stop the bearish wave or lose even more money. However, the price war could cost OPEC much more expensive, because, over the past 10 years, America has turned from an importer into the largest exporter of petroleum products in the world," they added.
The material has been provided by InstaForex Company - www.instaforex.com