What’s driving the global oil markets?

The global oil market is facing turbulence as rising US crude inventories and escalating political tensions between the United States and Iran continue to impact prices. Uchenna Minnis, Chief Market Analyst at Eagle Global Market, recently discussed these factors in an interview with CNBC Africa. The key theme revolved around the US's play in the oil markets, with a focus on President Trump's efforts to drive oil prices lower. President Trump has been vocal about his goal to lower oil prices to benefit his voter base. By imposing sanctions on Iran and revoking waivers for other consumers of Iranian oil, the US is covering for the possible deficit of Iranian oil in the market. Recent reports of a significant surge in US crude inventories have added pressure to oil prices, with stockpiles nearing record highs. Minnis highlighted the importance of considering both supply and demand factors in the oil market. While the focus is often on supply, factors such as the escalating US-China trade war can impact demand significantly. The trade tensions have raised concerns about reduced purchasing power in China, the second-largest consumer of crude oil, as the US continues to increase oil production. Looking ahead, the upcoming OPEC meeting is expected to address the challenges posed by geopolitical and trade risks. OPEC is likely to seek an extension of production cuts to stabilize prices. However, uncertainties remain as market dynamics are influenced by both supply control efforts and demand fluctuations. In Nigeria, recent incidents such as the fire in a pipeline have raised concerns about the impact on oil production. Nigeria's role in OPEC and the need for higher oil prices to balance the budget make production levels crucial. The region's significance in the global oil market adds to the importance of monitoring developments that could affect production. Minnis also addressed the potential impact of political unrest in Nigeria, particularly the threat of a militant group declaring a republic in June. While such events can create short-term market fluctuations, the underlying idea of a supply squeeze due to political tensions drives investor sentiment. Any disruption to Nigeria's oil production could have ripple effects on global prices amidst a delicate balance of supply and demand forces. As market participants navigate through uncertainties surrounding US policies, geopolitical tensions, and production challenges in key oil-producing regions, the global oil market remains vulnerable to volatility. The interplay of factors such as trade disputes, political unrest, and supply dynamics will continue to shape oil prices in the coming months.