Brent crude oil price crashed on Friday amid rising trade tensions, and the downtrend may continue after the latest OPEC+ meeting. It dropped to $62.60 on Friday, down by 25% from its highest level this year.
OPEC+ crude oil production increase
The main Brent crude oil news is that OPEC+ cartel agreed to increase oil production for the third consecutive month.
They will now increase production by 411,000 barrels a day in July, matching the last two month’s increases.
These increases are driven by Saudi Arabia’s desire to punish members of the group, like Iran and Kazakhstan. The cartel also wants to satisfy Donald Trump, who has expressed a desire to lower crude oil price and gasoline prices in the US. In a note, an analyst said:
“Fundamentals in the right-here, right-now are strong — inventories are very low. It is a good time for OPEC+ to add barrels to the market, so I don’t see why they wouldn’t.”
Iran talks and Russia sanctions
The next key catalyst for crude oil prices is the ongoing talks with Iran. Trump has expressed concerns to reach a deal with the country, with an announcement expected to happen in June.
The main issue that is remaining is whether Iran should continue enriching its uranium for civilian use. While Trump is open to that, Israel has warned that it may be forced to make unilateral decisions and bomb them.
A deal with Iran would help the country boost its production and increase oil supply in the market. However, an escalation from Israel would disrupt oil flows.
The other key crude oil news is that the Trump administration is set to impose additional sanctions on Russia. A bill sponsored by Senator Lindsey Graham would impose secondary sanctions on countries that buy its oil.
The sanctions will also place a 500% sanction on goods Russia ships to the US, and bar US citizens from buying Russian bonds.
Further, crude oil price will react to the escalating trade war between the United States and China. Trump has accused China of not implementing the deal reached in Switzerland. As such, there is a likelihood that the trade war could restart as Trump attempts to shed the ‘Trump Always Chickens Out” tag.
Brent crude oil price forecast
The weekly chart shows that the Brent crude oil price has been in a strong bearish trend in the past few months. It recently crashed below the lower side of the forming descending triangle pattern, a popular bearish continuation sign.
Brent has remained below the 50-week and 100-week Exponential Moving Averages (EMA). Therefore, the most likely scenario is where Brent ultimately crashes to mid $50s in the coming weeks as JPMorgan analysts predict.
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