Trump to OPEC: ‘Reduce pricing now!’

Roman Schwartz
July 6, 2018

Brent crude futures lost 85 cents to settle at $77.39 a barrel.

West Texas Intermediate crude for August delivery fell 97 cents to US$73.17 a barrel at 11:05 a.m. on the New York Mercantile Exchange.

Trump's problem is that spare output capacity in the oil market is limited, and U.S. inventories of crude oil are still relatively low.

"The decision by the US administration is expected to be taken on Friday and China is expected to retaliate immediately", said Hussein Sayed, Chief Market Strategist at futures brokerage FXTM.

"Your tweets have driven the prices up by at least US$10 per barrel", Iran's OPEC governor Hossein Kazempour Ardebili said in a message to Trump, carried by Iranian Oil Ministry's Shana news service.

However, the Chinese government has not yet specified a date on which it may introduce duties on imports of USA crude.

USA light crude jumped $1.17 to US$75.11 a barrel, its highest since November 2014.

Spare capacity, especially from OPEC countries, is an important measure by analysts to determine major oil exporters' ability to respond to rising demand.

China's customs agency said on its website that Chinese tariffs on USA goods would immediately be implemented in retaliation.

Trump Says Kim 'Sees Different Future' for North Korea
This does indeed fir with what some other officials have said of Kim's priorities, including North Korean state media. The two leaders did not, however, sign off on any details as to how denuclearization would be achieved and monitored.

He added that his refinery had canceled US crude imports and would switch to Middle East or West African supplies instead.

They say this is to create greater stability in the market and the domestic economies of member states and to ensure a fair return for investors in the oil industry.

Barely a week after OPEC's decision to ramp up oil supplies, Trump surprised the world on Saturday by announcing a new side agreement with the Saudis to compensate for supply shortages from two crisis-hit producers, Iran and Venezuela.

"Iran's exports are some 2.7 million bpd, including condensate", it noted.

"With Trump not backing off on Iran sanctions, lot of geopolitical risk is there on crude oil and 1mpbd of Iranian crude oil production could be lost to the market".

Some are already reacting.

Libya's National Oil Corp (NOC) declared force majeure on loadings from Zueitina and Hariga ports on Monday, resulting in 850,000 bpd of supplies being disrupted.

An International Energy Agency scenario projects oil production falling by around 1.5 million bpd due to the loss of Iranian and Venezuelan oil.

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