Gulf based members of the Organization of Petroleum Exporting Countries (OPEC) began pumping oil at immense records said the International Energy Agency (IEA) on Wednesday, thus, this strategy could hinder oil prices even further.
“It would thus be premature to suggest that OPEC has won the battle for market share,” the IEA said. “The battle, rather, has just started.”
Oil prices have been on the slump since June as an oversupply of US Shale production and passive demand acted as the key driver, while threatening market positions fragile economies. On the other hand, countries such as Russia and Brazil were more resilient to low prices as they performed better than expected.
In June, oil was at $120 later collapsing to $45 in January. However, oil has recently showed signs of a recovery as it crept up to $60 a barrel.
According to IEA, oil prices plunged due to a weak demand, strong US dollar and an oversupply in US production.
Recently, oil markets have experienced an increase in demand which has helped ease the oversupply in oil, however, the overall global demand was not so eye-catching. This also indicated that a surplus in crude oil could be moving into the refined product market, pushing oil prices to become more volatile.
After agreeing to keep oil production at 30 million barrels in November, OPEC, the 12 member oil cartel, will meet once again on June 5 at their ministers’ ordinary meeting. However, this time they seem to work more collaboratively with one another said, Kuwaiti Oil Minister Ali Al-Omair.
Oil supplies are still surpassing demand, as the IEA keeps its forecast for the expansion of global oil demand steady at 93.60 million barrels a day on average. Growth in global oil supply on the other hand, remained uplifted at 3.2 million barrels a day, year by year in April. Growth in total oil supplies for 2015 is anticipated to increase by 200,000 barrels a day from the previous months report to 830, 000 barrels a day.