Global oil prices fell Friday after top producer Saudi Arabia signalled a likely boost in supply as soon as the third quarter, and world stock markets were mixed over the sudden US move to cancel the summit with North Korea.
Saudi oil minister Khaled al-Faleh said at an economic conference in Russia that a gradual output increase could happen in the second half of the year to prevent any supply shocks, according to the RIA Novosti agency.
OPEC and 10 other oil producers agreed at the end of 2016 to cut output by 1.8 million barrels per day to clear a glut that had led to a collapse in prices in 2014. The deal, which has been extended until the end of 2018, has led to that glut disappearing and prices have recovered from around $30 per barrel to around $80.
Following the Saudi comments, Brent Crude fell by $1.88 to $76.91 per barrel, while WTI Crude likewise lost $1.99 to $68.72.
Russia’s oil tsar Alexander Novak said ministers from the OPEC cartel and other members of the production pact would discuss how much to increase production next month.
“If we come to a common opinion that it is necessary” to increase supply it “should probably take place from the third quarter,” Novak said, according to RIA Novosti.
Uncertainties about supplies from Iran and Venezuela have led prices to spike higher in recent weeks, with industry players warning they could jump to $100 per barrel.
Meanwhile, London and Paris indices slipped in afternoon trading, with only Frankfurt holding a slim gain as both Washington and Pyongyang appeared to be leaving the door open for the summit to eventually take place.
In New York, the Dow was lower in early trade Friday as falling crude prices dragged energy stocks lower and investors continued to digest a confusing series of reports on geopolitics and US-China trade.
Shortly after the open, President Donald Trump said the summit with North Korea that he had called off just 24 hours before could go ahead after all as talks with Pyongyang were continuing.
Investors were contending with the possibility that the summit’s cancellation could cause Trump to be more aggressive in trade talks with China.
Asian markets mostly fell Friday after the news that Trump had abruptly axed next month’s summit with North Korean leader Kim Jong Un. For its part North Korea declared that it is willing to talk to the United States “at any time”, while China urged both sides to show restraint.
“The focus has been firmly centred upon Donald Trump, with his decision to cancel the June meeting with Kim Jong Un bringing about a return to the risk-off sentiment,” said analyst Joshua Mahony at trading firm IG.
Markets have been jittery this week as the US president had warned in recent days that he could cancel the summit, while also voicing his displeasure at a deal to avert a trade war with China and threatening tariffs on car imports.
Thursday’s summit cancellation took many by surprise—including North and South Korean officials—and fuelled concerns about the future of a rapprochement that has had many hoping for peace on the divided peninsula.
“It looks like we are back to fire and fury as the modus operandi for the White House again after President Trump (threatened) a new 25 percent car import tariff and cancelled the summit with North Korea,” said Greg McKenna, chief market strategist at AxiTrader.—AFP