'Reduce Pricing Now': Trump's Complicated Relationship with OPEC Countries

07 July, 2018, 11:48 | Author: Mary Valdez
  • President Rouhani talks to Iranian expatriates in Bern Switzerland

USA crude futures slipped on Thursday after data showed an unexpected 1.3 million-barrel build in crude inventories.

Brent crude futures were at $77.78 per barrel at 0137 GMT, down 46 cents, or 0.6 percent, from their last close.

US crude futures fell $1.20 to settle at $72.94 a barrel, retreating from Tuesday's 3-1/2-year high of over $75.

On Independence Day, Trump resumed his Twitter assault on OPEC and high oil prices.

Mr Trump on Wednesday accused the Organisation of Petroleum Exporting Countries (OPEC) of driving up fuel prices. His latest was a reminder that the U.S. defends many OPEC members for "very little" money.

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

OPEC agreed with Russian Federation and other oil-producing allies last month to raise output from July, with Saudi Arabia pledging a "measurable" supply boost but giving no specific numbers.

He addressed Trump by saying that the global oil market now does not have sufficient amount of oil to supply U.S., adding "you are putting pressure on those OPEC member states that you claim to be your allies". Last month, in an interview with Reuters, he said that "you (Trump) can not place sanctions on two OPEC founder members and still blame OPEC for oil price volatility".

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But while some have interpreted the Saudi move as a traditional Saudi card to always scramble to soothe American frustration and oblige to U.S. demands, other reports have suggested that Riyadh's move is the result of deep political calculations: step in to stabilize oil prices and compel the USA to adopt tougher measures on Iran.

In addition to cutting prices, Saudi Arabia told OPEC it pumped about 10.5 million barrels of crude a day last month as the kingdom sought to cap rallying prices by ramping up output, according to people familiar with the matter.

In the wake of threats from the United States (US) to reduce its oil revenue to zero, Iran has flouted plans of purchasing goods only from countries that import its oil. Saudi Arabia agrees with Trump on the importance of keeping prices down but has not committed to increasing output sufficiently.

Also on Thursday, data showed U.S. crude stockpiles rose unexpectedly last week by 1.2 million barrels. "If supply doesn't rise, we expect Brent prices to touch $85 by year end as markets will be in a deficit", Valecha said.

Iran has threatened to block oil exports through a key Gulf waterway in retaliation against any hostile USA action. Saudi Arabia remains the big victor from this situation.

In response, Iranian oil official Hossein Kazempour Ardebili said that Trump should stop tweeting because his statements have pushed oil prices up by about US$10 a barrel, according to Oil Ministry news service, Shana.

"They have to put out another 2 million barrels in my opinion", he said in the July 1 Fox interview.

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