Global oil prices are likely to remain volatile over the coming months as the strength of global demand remains uncertain and questions linger over how much supply will come online.

Prices have risen by almost a third since the beginning of April and, as members of oil producers’ group Opec prepare to meet on 2 June, West Texas Intermediate (WTI) crude is hovering around $50 a barrel.

The surge has given a boost to oil producers, but it remains to be seen if the higher price can be sustained.

One key factor is US unconventional crude production. Over 2016, low oil prices have put immense pressure on fracking companies in the US, derailing the shale oil gravy train.

In March, UK financial services company Deloitte said the number of US hydrocarbons exploration and production companies filing for bankruptcy in 2016 could be six times more than in 2015.

The financial troubles have been accompanied by a decline in US production, which peaked in July 2015 at 9.5 million barrels a day (b/d).

Since then it has declined by 7 per cent to about 8.8 million b/d, according to the US Energy Information Administration (EIA).

The rise in oil prices over recent months has increased optimism that many US shale producers will once again become profitable and increase activity. This could dramatically increase US production – something that would weigh on global oil prices.

Although oil prices of $50 a barrel may help some low-cost shale producers to turn a profit, further increases will be needed for the majority of operators to significantly ramp up production.

Chris Faulkner, CEO of US exploration and production company Breitling Energy, estimates that the average production cost for US shale producers is about $55 a barrel.

Nigeria and Iran are also sources of uncertainty with regard to global oil production.

Nigeria has seen its crude output decline by 1 million b/d over 2016 due to ongoing militant activity in the Nile Delta region.

This has been offset by increased exports from Iran, which has rapidly boosted production in the wake of international sanctions being lifted. Over the next few months, both the conflict in Nigeria and Iranian efforts to ramp up production are likely to continue to affect global oil prices.

On the demand side, the sustained period of low oil prices has sparked increased consumption in developing economies including Pakistan, India and Indonesia, which could sustain higher oil prices.

Another factor that could affect global prices is a deal between major producers to cut output.

Deteriorating relations between Iran and Saudi Arabia mean it is not likely any such agreement will be found at the Opec meeting on 2 June.

Relations between the two countries have been troubled since January, when Iranian protesters ransacked the Saudi Embassy in Tehran after a Shia Muslim cleric was executed in Saudi Arabia. After the embassy was ransacked, diplomatic ties between the two countries were severed.

The dispute between the kingdom and the Islamic Republic reached a new low on 29 May, when Tehran said Iranian pilgrims would not be able to attend the hajj pilgrimage to the holy Saudi city of Mecca due to restrictions imposed by Riyadh.

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