Economy

Trump to Saudi Arabia: Lower Oil Prices or Else

Trump to Saudi Arabia: Lower Oil Prices or Else

President Donald Trump says OPEC is "doing little to help" rising gas prices and claims "if anything, they are driving prices higher".

U.S. President Trump continues to bash Saudi Arabia, in particular, and OPEC, in general, to raise production, which he believes will lead to lower prices.

Trump indirectly linked USA foreign policy to his demand, saying the US defends some oil producing countries "for very little" money.

"This must be a two way street", he wrote, adding in block capitals, "REDUCE PRICING NOW!"

Weighing on prices was a rise in U.S. crude inventories of 1.2 million barrels in the week to June 29, to 417.88 million barrels, the U.S. Energy Administration (EIA) said on Thursday.

Oil prices rose on Tuesday after Libya declared force majeure on some of its crude exports, while the loss of Canadian supplies helped lifted US crude to 3-1/2-year highs.

Hossein Kazempour Ardebili, Iran's ambassador to the Organization of the Petroleum Exporting Countries (OPEC), was quoted by media as saying that the world - and specifically American consumers - would eventually consider Trump blameworthy for runaway oil prices in worldwide markets.

In response, Ardebili warned, "Your tweets have driven the prices up by at least $10 per barrel. Please stop this method". Analysts had expected a 3.5 million-barrel draw.

United States tariffs on Chinese imports take effect
China will also start collecting a 25 percent levy on $US34b of United States goods such as agricultural products and cars. After that, Trump has made it clear he is planning additional duties on Chinese products worth a staggering $500 billion.

The legislation still probably won't go anywhere, but OPEC could be forgiven for being confused by the mixed signals coming from Washington, which can essentially be boiled down to: "Stop your anti-competitive behavior" but "intervene in the markets to manipulate prices to our benefit", and "nobody is allowed to buy oil from Iran" and "why are oil prices so high?!" The global benchmark traded at a US$6.11 premium to WTI for the same month. Trump said the agreement was reached after a phone call with the Saudi King about oil production but mentioned no specifics.

Kazempour Ardebili said Trump was trying to fuel tensions between Iran and Saudi Arabia in advance of a meeting between Iran and the five remaining signatories of a deal restricting Iran's nuclear program.

Oil output cuts by the Organization of Petroleum Exporting Countries and allies including Russian Federation since January 2017 have reduced a glut of crude. While Trump says he wants lower oil prices, United States sanctions against OPEC members Iran and Venezuela are adding uncertainty to the market, causing prices to spike.

Morgan Stanley increased its forecast for Brent oil prices by $7.50 per barrel to $85, on expectations of more outages from Angola, Iran and Libya.

Besides, the USA military reaffirmed on Jul.04 its promise to help keep oil tanker waterways in the Persian Gulf open, after Iran hinted that it might try to block the oil exports if the US continues actions to stop importing Iranian oil.

Brent for September settlement lost 20 cents, or 0.2 per cent, to US$78.04 a barrel on the London-based ICE Futures Europe exchange, after gaining 48 cents yesterday. He added there's not much spare capacity on the market to allay Trump's concerns. Besides, for the third week in a row, USA production stagnated at 10.9 million bpd - close to the 11 million bpd production that many had forecast for the year.

The growing USA pressure on the world to totally stop buying Iranian oil has produced a warning from top Iranian officials that the world economy, and America's economy in particular, would pay a severe price from such a ban.


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