Dissent within the Organization of the Petroleum Exporting Countries (OPEC) could help pressure on oil prices and related exchange traded fund over the short-term, with Saudi Arabia adamant on squeezing out new players in the market, such as shale and deepwater drillers.
Year-to-date, the United States Brent Oil Fund (NYSEArca: BNO) declined 19.7% while the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate oil, decreased 8.9%. [Saudi Arabia’s Ambitions Keep Pressure On Oil ETFs]
WTI crude oil futures were hovering around $85.0 per barrel Monday while Brent crude was at $88.4 per barrel. WTI and Brent have both declined over 20% from their June high, entering a bear market.
Discord within OPEC, an oil cartel created to influence global prices, has pushed down energy prices as Saudi Arabia, the top producer, continues to increase output, whereas other members are calling for cuts to support prices, the Wall Street Journal reports.
Specifically, OPEC-members Venezuela and Iran require higher prices to maintain a balanced budget. Venezuelan Foreign Minister Rafael Ramirez has called for an urgent meeting to counter the falling prices.
“It doesn’t suit anyone to have a price war, for the price to fall below $100 a barrel,” Foreign Minister Rafael Ramirez said in a statement.