Geopolitical tensions give more force to OPEC's ratchet

摘要

OPEC and its allies have been able to tighten the market using a production-cut ratchet since January 2017. Oil stocks have been declining and are now almost at their target levels of the five-year average. Geopolitical tensions have a more significant impact on oil prices in the absence of a stock buffer. Oil prices in the first quarter of 2018 were primarily driven by geopolitical tensions in the US, China and recently the Middle East. Trade war threats between the US and China led to a surge in most commodity prices.