Oil slumps as Saudi Arabia, Russia consider reviving output

Oil prices fall as supply from top three producers set to rise

U.S. West Texas Intermediate was down 1.8 percent at $66.67 a barrel in NY, after climbing to as high as $72.83 on May 22.

The Saudis also have to balance the geopolitics of oil, striking a balance between their need for relatively high prices against the support of U.S. President Donald Trump in their struggle against regional rival Iran. This lack of increase in oil supply from Libya has less to do with the production cuts imposed for OPEC members and more to do with the unstable political situation in the country.

After the U.S. announced its intention to re-impose sanctions on Iran following its withdrawal from the Iran nuclear deal, 2m barrels of Iranian oil went off the already tight market, pushing the price towards the $80 mark.

The fall in prices of oil for drivers has been welcome news as it has been for companies that purchase large amounts of energy.

Oil prices, which had surged to their highest level in over three years last week are now slumping. While the crude oil prices were low, the government repeatedly levied cess on fuel to fund its infrastructure and other development programs while keeping the annual budget deficit in check.

Raising production would ease 17 months of strict supply curbs amid concerns that a price rally has gone too far, with oil having hit its highest since late 2014 at $80.50 a barrel this month.

More news: Centre looking for immediate solution to soaring fuel prices : Oil Minister

The United States is set to export 2.3 million barrels per day (bpd) in June, of which 1.3 million bpd will head to Asia, a senior executive with a key U.S. oil exporter estimated. Prime Minister Dean Barrow in a press conference recently said that prices would be going up due to the rise in price on global markets.

Oil traders were active on Monday despite the Memorial Day holiday and the closure of US stock and bond markets.

The Organization of the Petroleum Exporting Countries is due to meet in Vienna on June 22. Further, since the election win of President Nicolas Maduro, the risk of USA imposing sanctions on Venezuela's oil industry have risen and if imposed could lead to further supply disruptions.

Concerns that Saudi Arabia and Russian Federation could boost output have put downward pressures on oil prices, along with rising oil production in the US.

Another study was conducted in 2004 by the U.S. Department of Energy to assist the country in assessing the options and potentials for strategic oil stockpiles as well as give recommendations to enact legislation pertaining to the oil stockpiling program.

The creation of strategic petroleum reserve (SPR) is founded on several joint global studies, the DoE's Oil Industry Management Bureau said.

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