Kuala Lumpur — Crude oil prices remain fragile because they are caught between supply and demand uncertainties arising from the political climate in the Middle East and the US-China trade dispute, Vitol Group CEO Russell Hardy said at the Asia Oil & Gas Conference on Monday.
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Hardy said that, amid these uncertainties, the OPEC+ grouping of oil producers including other countries such as Russia has been struggling to reach a stable price equilibrium.
"I think OPEC+ is trying to maintain that...price to enable a stable investment environment and a stable budget. That's not an easy task to do," Hardy said, especially with oil price volatility of nearly 50% in recent months, which he said was probably not expected by OPEC.
OPEC and non-OPEC oil producers are nearing the expiration of their 1.2 million b/d production cut agreement at the end of June, but the producer group's decision on when next to meet has been complicated by growing tensions in the Middle East.
"I think the [oil] price is really fighting itself between supply concerns and demand concerns," Hardy said.
He added that the US-China trade dispute has been impacting the current market, although he said that in the longer term energy transition is something to watch out for, as European governments are changing the energy landscape very quickly through carbon pricing and electric vehicle regulation.
Hardy said macroeconomic indicators of a slowdown were a warning sign that the market should be worried about, but added that the monetary authorities have been doing their best to stimulate the economy and that he was more concerned about geopolitical incidents than the economic factors driving the growth forecasts.
"I think it's more likely a political surprise that may throw us off course rather than the growth of the general economic outlook," Hardy said.
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