Middle Eastern turmoil spikes oil prices

Increasing geopolitical tension in Middle East adds weight to oil prices nevertheless, gains shadowed by persisting oversupply in crude

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Oil prices were slightly higher on Monday after ISIS took full control over Ramadi over the weekend.

Anbar’s capital Ramadi acts as a strategic key town to the Middle East region as it sits in the centre major oil refineries.

Brent crude rose by 7 cents at $66.88 a barrel against earlier price of $67.88 a barrel. US crude on the other hand, climbed by 42 cents to $60.11 a barrel.

Since the beginning of this year, oil prices have shown signs of recovery as they hiked by 40 percent over the recent months in hope that the US shale boom will ease.

Recently, Iran and Venezuela has called for the Organisation of the Petroleum Exporting Countries (OPEC) to cut oil production in order to reclaim producers' oil revenues which have been affected by low prices. However, Iran's Deputy Oil Minister Rokneddin Javadi, said on Monday that the cut in output to be announced at the next OPEC meeting on June 5 is unlikely.

Especially after its current strategy has succeeded in curbing non-OPEC output and allowed OPEC to regain market share states Reuters.

Saudi Arabia, the key driver of OPEC, decided to maintain output and kept global markets largely supplied in its last November meeting. As a result, oil prices plunged down from a near $120 a barrel in June last year to a striking $45 a barrel in January.

TRTWorld and agencies