The release of the weekly listing of US oil inventories shows a drop in the prices of Brent and WTI. The United States has expanded output to the highest levels since August 2016, and even though the listing shows that country’s stocks are down 1 million barrels – confirming a stock reduction for the second consecutive week – this datum is clouded by the fact that the supply of fuel has risen for the first time in nine weeks.
The oil market is being shaken by the prospect of rising shale production, along with rising demand for drilling in the US and indications that OPEC will be reluctant to carry output cuts into the second half of 2017. However, according to Ammar al-Hakim, who leads the Supreme Islamic Council of Iraq, his country is in favor of extending the OPEC agreement, albeit adding that Baghdad may request an exemption from its share in the cuts given the strategic importance of oil revenue to the country’s internal struggles against the Islamic State. "Given these sensitive circumstances, it is the right of Iraq to hope for an exemption by the other OPEC member states and have an opportunity to increase its production," Hakim stated at a recent news conference, adding that Iraq supports the output cuts agreement in principle.
In Saudi Arabian affairs, it has emerged that a consortium of Chinese state oil companies, banks and SWFs will act as primary investor to the IPO of Saudi Aramco, scheduled for next year. The consortium’s investment may pressure the board of directors of Saudi Aramco, which will hold a summit in Shanghai with officials from the Chinese consortium in May, to privatize the company through a process of quotation on an as yet undecided Asian stock exchange. Energy cooperation remains the foundation of relations between Saudi Arabia, the world’s biggest oil exporter, and China, the biggest importer.