Daily News: Middle East Situation Puts Oil-Producing Countries in a Difficult Position

According to the Nikkei on June 18th, the increasingly urgent situation in the Middle East has posed a dilemma for Saudi Arabia, which wants to stabilize oil prices. While the high oil prices at the moment have brought dividends to oil-producing countries including Saudi Arabia, blind increases in production could lead to a price collapse, prompting Saudi Arabia to continue to adopt a cautious stance. Pressure actions taken by US President Trump to suppress oil prices are also squeezing Saudi Arabia's room for maneuver. On June 13th, Israel launched an attack on Iran's nuclear facilities, causing oil prices to soar. The benchmark West Texas Intermediate crude oil futures price in the United States rose to $77.62 per barrel, reaching a high point in 5 months. It has since remained at high levels around $70 per barrel. Although Israel and Iran are still retaliating against each other, they have not yet had a substantive impact on oil supply. As the leader of the Organization of Petroleum Exporting Countries, Saudi Arabia currently seems to be choosing to wait and see. Yukiharu Fukasawa, director of the Institute of Energy Economics in Japan, believes that "in recent years, Saudi Arabia has built good relations with Iran through diplomatic efforts. In order to avoid being involved in conflicts, Saudi Arabia seems reluctant to provoke Iran." While rising oil prices may bring benefits to Saudi Arabia, it is not blindly choosing to increase production. The current high oil prices are mainly due to market concerns about a military conflict between Israel and Iran, rather than the result of a disruption in oil supply balance. If supply is increased at this stage, it may unwittingly exert pressure on oil prices.