Oil prices slip as Trump calls on Opec to lower prices

23 September, 2018, 12:13 | Author: Regina Silva
  • Oil prices slip as Trump calls on Opec to lower prices

USA president Donald Trump tweeted that OPEC needs to keep crude prices lower because of the military protection the US provides for the region.

He also announced that the Persian nation will decline its attendance to an OPEC meeting scheduled for this weekend in Algiers, Algeria. That's been a red line for the White House in the past, provoking the president to direct his first social-media barb against the cartel since July 4.

Analysts argued that the continued drawdowns in oil stockpiles, even though we are past the summer driving season, are a result of increased USA crude oil exports, which have been supported by the widening differential between USA benchmark WTI prices and the global benchmark, Brent crude.

The U.S. and some other OPEC members will probably increase crude supplies from their inventories to keep a lid on prices ahead of the American mid-term Congressional elections in November, he said.

On Wednesday, WTI increased 1.8 percent to settle at 71.12 US dollars a barrel on the New York Mercantile Exchange, while Brent crude for November delivery increased 0.5 percent to settle at 79.40 dollars a barrel on the London ICE Futures Exchange.

"Also, Iranian oil minister Bijan Zanganeh on Thursday said he would veto any OPEC deal that imperils Tehran's oil market share, complicating the organisation's talks with Russian Federation and other partners to institutionalise their supply management accord beyond this year". He said he has written letters to some OPEC and non-OPEC oil ministers expressing his concerns and has complained to the group's secretary-general about "violations" to the original output-cuts agreement, though he wouldn't elaborate.

The president is returning to a playbook that's won him significant victories already this year.

Markets Insider
Markets Insider

The President has tweeted several times that he wants low oil prices, prodding Opec to simply open its spigots. On Wednesday, WTI climbed back above $70 a barrel. While Saudi Arabia and Russian Federation have recently boosted output to compensate, it's unclear whether they're willing or able to offset all the losses from Iran.

He indirectly criticized Saudi Arabia for vowing to compensate for the market demand after the United States imposes oil sanctions against Iran on November 4.

The change in the kingdom's view on prices coincided with some intense oil diplomacy. USA oil inventories are about 3 percent below the 5-year average for this time of year.

By late 2014, there was a global oil glut, prices were collapsing and US shale was showing no sign of slowing.

OPEC, Russia and some of their allies agreed in June to boost production by 1 million barrels per day, after agreeing to a supply-cutting deal since 2017.

United States crude futures settled up US$1.27, or 1.8 per cent, at US$71.12 a barrel.

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