The oil price has plunged in late spring: during several exchange sessions (in the period between May 28 and 31), the futures contracts of the benchmark Brent crude oil dropped more than 10% as prices sank from $70 per barrel to below $62.

Experts referred to the fresh statistics of the US crude reserves as the reason for such a substantial correction of the barrel price on the exchange. However, that is still too weak a factor for a price crash like that.

In all likelihood, speculative traders are focusing on the fact that the trend of weakening export positions on the global oil market of such prominent players as Iran and Venezuela due to the mounting American pressure on those states (with Venezuela still undergoing a lingering political and economic crisis) is triggering a looming split within OPEC+. The piquancy is that certain representatives of the coalition have spotted an opportunity to carve out the niches that become available.

For example, if the Saudi are not against continued attempts to rein in output even amid export oil volumes globally still being withdrawn from particular countries, Russia is not so selflessly seeking to limit the hydrocarbons market any more. Specifically, Russia’s Finance Minister Anton Siluanov told journalists during the visit to Nur-Sultan that Russia should carefully look into the extension of the OPEC+ agreement. There are arguments both for and against the deal’s extension, he noted.

Head of the Finance Ministry hinted that apart from OPEC+ being interested in stable and predictable prices, the reverse side of the deal suggests that the efforts of Russia and Saudi Arabia to constrain oil output provide preferences to North American shale oil producers, which enables them to tap new markets.

As known, the OPEC+ agreement on output reduction by 1.2 mln barrels per day from the level of October 2018 covers the first half of the year. However, already at the end of June a relevant meeting will see a decision regarding the second half of 2019 taken.

Interestingly, the session is likely to be postponed to July due to the sensitivity of the limitations-related agenda itself. Particularly as all OPEC+ member-states can start blindly boosting output automatically from July 1 (the date when the OPEC+ agreement on production quotas officially terminates). Which can swiftly collapse the barrel price to below $50.

On the other hand, the risk of geopolitical escalation in the Middle East is still supporting global oil prices. The relationship between Iran and the US flared up notably in May. The US military command warned about possible preparations of an attack on American forces in the Middle East by Tehran. The US authorities sent the Abraham Lincoln Carrier equipped with aircraft to the Persian Gulf under the pretext of a response to Iran’s threats to American interests. Notably, the American leader Donald Trump announced the intention to continue fortifying the military group in the Persian Gulf area. Iranian Foreign Ministry slammed Washington’s actions as a threat to global stability and dubbed the American carrier as “a perfect target.”

Meanwhile, the Americans continue whipping up tension. On May 31, US Secretary of State Michael Pompeo said that Iran had attacked tankers in the waters of the United Arab Emirates (UAE) to drive up the oil price on the global market. The UAE’s Foreign Minister reported about the incident back on May 12 when four vessels were attacked in the country’s exclusive economic zone. Later the Pentagon said it had obtained information that Iran was involved in the attacks on tankers, while Tehran rejects those accusations.

Top Military Aide to the Iranian Supreme Leader Yahya Rahim Safavi alluded to another possible round of the global oil price surge on June 2, saying that any clash between Iran and the US in the Persian Gulf would “explode” the global crude market. “The first bullet fired in the Persian Gulf will push oil prices above $100. This would be unbearable to America, Europe and the US allies like Japan and South Korea,” Safavi was quoted as saying by Reuters.

In a nutshell, the oil market is currently undergoing the stage of high volatility. The horizon of such momentary bifurcations traditionally depends on a wide range of factors, though the basic criteria defining the development of the liquid hydrocarbons market are the demand and supply balance, geopolitical climate and incentives for investing in the oil production sector.