After peaking in early October, the oil market has started to fall continuously, and the last couple of weeks, the downturn has been massive. Friday, the market was close to a collapse-like sentiment, as the price on a barrel of Brent oil dropped by more than 8 %, and for the first time in more than a year fell below 60 US dollars. During less than a month, the price level has now fallen by around 20 dollars, almost 25 %.
It is not long ago that everything seemed peace and quiet on the oil market. The OPEC nations had agreed with Russia on a production level and global demand was on the rise. When the US announced the re-instatement of sanctions against the Iranian oil production, it was another bullish signal for the market, but since then, the sentiment has changed completely.
The US president Donald Trump has made it (another) key issue of his to get the oil price down. One of his efforts to get through with this wish has been to tweet more or less subtle threads against Saudi Arabia regarding potential US reactions to a new Saudi actions that could lead to rising oil prices. So far, Trump’s strategy seems to be a success, as the OPEC production deal with Russia appears to be stranded, and global supply is on the increase.
Apart from Trump’s aggressive policy, weak macro economical figures have affected global oil demand. Especially key figures from China have disappointed recently, and such a development affects the oil price. This week, China’s president Xi and Donald Trump of the US will meet and try to end the two countries’ trade war. The question is, if this meeting could be the event that puts a hold to the downturn on the oil market.