Times of Oman
Oman crude oil price close to two-year high
September 23, 2017 | 9:44 PM
by Syed Haitham Hasan / [email protected]mesofoman.com
Oman crude traded at $55.60 at the Dubai Mercantile Exchange on Friday for November delivery, which was $0.42 above the previous day’s trading, and the highest in six months. Photo-File
 
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Muscat: Oman crude rose to nearly its highest price in two years due to the high compliance by exporting countries with the OPEC production agreement, and also because of an increase in demand from China.

Oman crude traded at $55.60 at the Dubai Mercantile Exchange on Friday for November delivery, which was $0.42 above the previous day’s trading, and the highest in six months.

The latest spike in prices is likely due to the recent announcement by the Chinese government to allow three independent producers to further import 2.7 million tonnes of crude oil in 2017. These additional quotas come atop previous government grants of nearly 23 million tons issued in June. Oman crude is one of the popular grades among Chinese independent producers. China imported more than 132 million barrels of oil in the seven month period between January to July 2017.

After its fifth meeting in Vienna yesterday, OPEC and non-OPEC members said in a statement that the participating members in the agreement have reached a conformity level of 116 per cent in August, the highest since the agreement was reached in November 2016.



The members are currently locked into an output cap deal that runs until March 2018 to curb the supply glut that drove prices down to nearly $20 a barrel early last year. Under the agreement, Oman will cut nearly 5 per cent of its production, a reduction of 45,000 barrels per day.

“I think we all are happy to hear this news about a two-year high. We have been waiting for this news for two years. I imagine confidence will come back to the market with more activity, and diversification should accelerate,” said Imtiaz Sikder, a finance advisor.

For the construction sector, the price of oil is very important, and oil moving above $55 is a welcomed sight. As long as oil stays above $55, the construction sector can continue its revival,” a senior strategist at a construction company said.

While Omani businesses have rejoiced due to the stability of oil prices, residents are concerned about rising prices of gasoline at home.

“Its great that prices have gone up and its effects are already visible, but prices of petrol will rise and that is a matter of concern for us. We travel a lot here and prices going higher are sometimes a huge cost for us,” said Rahul Rajeev, an Indian student.

“The problem with rising prices of crude oil is that it has a direct impact on us. What if public transport starts increasing its prices? I hope not, but I’m just concerned, since I use them for commuting from one place to another,” noted Ahmed Sohail, a construction worker.

The price of low grade fuel is capped at 186bs per litre to help low income groups, and the government is currently working on developing fuel subsidy cards for them.

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