Brent Oil Reclaims $50 On Possibility Of Global Cooperation Among Poroducers

• Brent oil prices climbed above $50/bbl on Tuesday for the first time in two weeks.
• Prices have been boosted by speculation of increasing cooperation among global producers.
• Geopolitical uncertainties in Iran and Syria have the potential to serve as both negative or positive catalysts for oil process in coming months.

The price of Brent crude oil, the global benchmark, reclaimed the $50/bbl level in trading on Tuesday for the first time in two weeks on speculation that global producers may soon be acting in cooperation to help support oil prices. The massive supply glut that has crushed oil prices over the past year has so far been worsened by OPEC’s refusal to dial back production in an attempt to maintain and even re-gain market share that it has lost to U.S. shale producers in recent years.

Change of heart?
Just last week, Russia’s energy minister met with Saudi Arabian officials to discuss the oil market, and the two nations reportedly will continue a dialogue on the topic.

OPEC Secretary-General Abdullah al-Badri also recently indicated at a London conference that OPEC and non-OPEC producers should work together to eliminate the supply glut that is weighing on global oil prices.

Headed in the right direction
According to al-Badri, OPEC already sees signs of a pickup in crude demand as well as a fall-off in non-OPEC production levels. At the same conference, the former head of EOG Resources Inc EOG said that U.S. oil production growth will continue to decline throughout the rest of this year and production levels will start falling in early 2016.

Geopolitical unknowns
In addition to the possibility of international cooperation among producers, global oil investors are also watching the impact that the Iran nuclear deal will have on global oil supply and the tensions between Russia, the U.S. and other global powers in Syria.

In the past five trading sessions, shares of the United States Oil Fund ETF USO have climbed 4.5 percent.

Disclosure: the author has no position in the stocks mentioned.