Oil prices were lower this morning, despite moves by key producer Saudi Arabia to boost revenues.
For Brent, this is its low-point for the whole of the last month, which began at $71.10 on 8 April, reaching a high of $74.57 on 24 April. WTI is, likewise, at its monthly low, having been $64.40 a barrel on 8 April and peaking at $66.30 on 23 April.
“I called up OPEC”
On the face of it, prices should be rising, given tightening US sanctions against Iran and Venezuela are taking crude off the market and have been used by Saudi Arabia to raise the prices it is charging to major Asian buyers, including India and China. But there is scepticism in the market as to whether the Saudi price rises can be maintained, not least because of President Donald Trump’s well-known adverse reaction to continuing high fuel costs.
A recent intervention emerged on 26 April when, according to CNBC, President Trump told reporters he had contacted the 14-nation energy cartel, the Organisation of Petroleum Exporting Countries (OPEC). He said: “The gasoline prices are coming down. I called up OPEC. I said, ‘You’ve got to bring them down. You’ve got to bring them down,’ and gasoline’s coming down.”
Elsewhere, a new bill in front of both houses of the US Congress would target OPEC using the anti-monopoly procedures common in dealing with domestic cases of market dominance. How this would work against sovereign governments is unclear.
Over the medium term, oil prices have strengthened. Three months ago, on 8 February, Brent crude stood at just $62.10, while WTI changed hands at $52.72.
Drive for renewables slows
Across the last 12 months, there has been relatively little movement. Brent was worth $74.85 on 8 May 2018, while WTI traded at $69.06.
If supply interruptions such as those created by US sanctions are one factor driving oil prices, expectations for world economic growth are another. In its most recent forecast, the International Monetary Fund (IMF) said global expansion was set to slow from 3.6% last year to 3.3%.
Meanwhile, political support in the Trump administration for fossil fuels remains strong. Speaking in Texas last week, on 30 April, US Secretary of Energy Rick Perry rebuffed suggestions that a low-carbon economy would rely entirely on renewable energy. He said: “[W]hat about fossil fuels? The answer is clear.
“Thanks to innovation...we need not abandon them, either. To every naysayer...let me pose this question: Rather than driving down these fuels by regulation...why not drive down their emissions through innovation?”
As if to underline his words, on 6 May the International Energy Agency (IEA) noted: After nearly two decades of strong annual growth, renewables around the world added as much net capacity in 2018 as they did in 2017, an unexpected flattening of growth trends that raises concerns about meeting long-term climate goals.
“Last year was the first time since 2001 that growth in renewable power capacity failed to increase year on year.”
The 30-nation IEA was founded in 1974, in the wake of the energy crisis that struck the previous year.