The price of Brent Crude, the global benchmark of oil prices, hit a two-year high Monday on comments of further potential supply cuts. After three years of over-supply and a low of $27 p/b, the price of oil has risen sharply in the past 12-18 months.
Turkish president Erdogan, who runs the oil exports from the Kurdish region of Iraq, said he could close the region’s oil tap, once and for all. Some 500,000 barrels of oil per day are exported out of Kurdish Iraq every day. Such a move would have an impact on the price of oil.
In addition, BP executive Janet Kong said current OPEC oil production cuts, should be extended beyond March 2018 to continue the supply-demand rebalancing. She was speaking at the FT Commodities Asia conference in Singapore.
Ratings agency Moody’s also updated its outlook on the oil and gas sector on Monday. It replaced the previous positve rating with a 'stable’ outlook.
“Our outlook has turned stable to reflect the increased likelihood of earnings growth slowing down for the global oil and gas players in 2018, after the sharp recovery in 2017,” said Moody’s senior credit officer, Elena Nadtotchi. “We also expect fundamental conditions to stabilise further as companies have cut their production costs and capital investment amid low oil prices.”
The ratings agency added it was likely that most strong earnings growth among oil and gas companies had run its course and would soon stabilise.
Meanwhile, as the Brent crude oil price rose Monday, a 2% rise in the price of West Texas Intermediate (WTI) oil wasn’t enough to close the gap between the two oil benchmarks. The likelihood of an increase in oil and energy production across the US, continues to weigh on its value.
With Brent crude around the $58 p/b and WTI crude at $51 p/b, that represents the widest spread between the two prices since mid-2015.