FILE PHOTOGRAPH OF OIL REFINERY IN SOUTHERN IRAQ CITY OF BASRA

Saudi Arabia, world leading exporter of oil, announced that it would only cut oil output if the non-OPEC producers decided to do so, causing a fall in oil prices on Monday.

The prices have reduced by 50% since June, and Brent crude oil is trading at 54,7 dollars per barrel, while U.S. WTI crude oil reached 45,7 dollars per barrel, and the Saudis are firm in the decision not to reduce production. Barclays experts predict that if production remains in the current level, which is around 30 million BPD, the surplus would rise from 0.9 to 1.3 million BPD. Saudi minister of oil repeated on Sunday that “As for prices, the market determines it.” Saudi Arabia is currently producing roughly 10 million barrels a day, highest rate since July.

The rising dollar is lifting the price of oil, and at the same time, excess production is lowering it, causing the oil price to fluctuate. The Merrill Lynch Bank of America report states that the trend of rising commodity prices, weak US dollar and zero interest rate policy, that was defining the global economy in the past 15 years is reversing. “This cycle has now gone into reverse with a decelerating industrial economy in China and the rise of U.S. shale.” The report also forecasted that the rising dollar, subdued growth and higher interest rates may keep commodity prices stable in this year.

China took advantage of low oil prices last year, and build the reserves, with high imports of oil. Storage capacities seem to be close to their maximum, reducing the orders of imported oil. Reports for February indicate that China imported 2.04 million tons of crude oil from Iran, which is a 3.7% drop from last year.