To make up for potential shortfalls in supply from Iran sanctions as well as other disruptions including Libya and Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) has agreed with Russian Federation and other oil-producing non-OPEC members to raise output from July.
The Iranian governor to OPEC said Thursday the US president should avoid stepping into the production group's work with calls to drive down the price of oil. If anything, they are driving prices higher as the United States defends many of their members for very little $'s.
"This must be a two way street", he wrote, adding in block capitals, "REDUCE PRICING NOW!" OPEC members agreed June 23 to increase crude oil output by pumping 1 million barrels more daily, but it is still unclear how much of the oil produced would ease off prices in a period-the northern hemisphere's summer-generally associated with high oil demand. However, summer months in the USA usually lead to increased demand for oil, boosting the price of gasoline in a midterm election year. Iran's OPEC governor Hossein Kazempour Ardebili said.
As for Trump's enthusiastic use of social media, Ardebili added, "Your tweets have increased the prices by at least $10; please stop this method". Earlier this year, the Saudi Arabian Oil Co., known commonly as Saudi Aramco, agreed to a joint research effort with the Center for Strategic and International Studies, a USA think tank. "If production increases as we now forecast, a large share of this would be eroded, leaving the global oil market with a limited "margin of safety", said Morgan Stanley's Rat. Analysts had expected a 4.4 million barrel drawdown.
West Texas Intermediate crude for August delivery fell 63 cents to $73.51 a barrel at 11:37 am on the New York Mercantile Exchange.
On Monday, Trump took another swipe at OPEC, accusing the oil organization of not helping the U.S. to reduce domestic gasoline prices. Should it succeed and Tehran's two million barrels a day be taken off the market, the cost of oil is likely to soar and cause a major headache for Trump domestically; the American public are known to be hostile to anything that increases the cost of filling up their cars.
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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. "While OPEC's effect on oil prices remains notable, the commodity is also rising for other reasons", Trump said Wednesday on Twitter.
Output cuts by OPEC and allies since January 2017 have reduced a crude glut. Trump could also use it as a tool to persuade buyers of Iranian oil to halt their purchases in the run-up to November 4, when USA sanctions against the Islamic Republic are due to snap back. While OPEC is facing mounting pressure from Trump to do more, America's sanctions on group members Iran and Venezuela are adding uncertainties, just as U.S. tariffs on Chinese goods kick in on Friday.
The market was expecting "higher exports and lower imports, but we got the reverse", said Rob Thummel, managing director at Tortoise, which handles $16 billion in energy-related assets.
Meanwhile, the market continued to watch rising US crude output, with this week's oil drilling rig count data, an indicator of future production, due at 1 p.m.
The global oil benchmark, Brent crude, was trading around $77.49 per barrel as of 8:20pm Nigerian time on Thursday.