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Oil prices chart new territory on supply-side concerns

06 July 2018
Oil prices chart new territory on supply-side concerns

The Saudi Arabian Oil Co., better known as Saudi Aramco, lowered August prices for light oil to Asia by 20 cents to $1.90 a barrel above the Middle East benchmark, according to Bloomberg.

U.S. President Donald Trump again accused the Organization of the Petroleum Exporting Countries of driving gasoline prices higher on Wednesday and urged the oil producer group to do more.

"REDUCE PRICING NOW!", Trump tweeted on Wednesday, accusing OPEC of "doing little to help" lower pump prices. His latest was a reminder that the USA defends many OPEC members for "very little" money. This must be a two way street. In return Saudi Arabia will protect US motorists against an increase in gasoline prices.

Crude oil prices in recent days have hit their highest levels since late 2014.

The growing United States 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. "We also expect Venezuelan production to decline a further 150,000 bbl/d towards year-end, with risks still skewed to the downside", Bjørnar Tonhaugen, vice president of oil market research at Rystad Energy, said. The global community had expected sanctions waivers for some countries, a tactic used in the Obama era to avoid supply shocks.

A survey of analyst expectations from S&P Global Platts revealed expectations of a drain on USA crude oil inventories of 4.5 million barrels last week, adding support to the concerns about a market deficit.

In response, Ardebili warned, "Your tweets have driven the prices up by at least $10 per barrel".

Kazempour said Trump was trying to intensify tensions between Iran and Saudi Arabia. "Please stop this method".

On Tuesday, crude closed near 78 dollars per barrel, driven higher by a sharp drop in USA inventories and the expectation of more drivers hitting the road for the July 4 holiday. The price of diesel fuel used largely by truckers was $3.17 a gallon, up 30 percent from a year ago, AAA said. Plus, a report today from data-provider Genscape Inc. was said to show Texas Gulf Coast crude stockpiles rose by about 431,000 barrels last week. But the tougher USA approach now makes the bank's analysts think that Iran's exports to Europe, Japan, and South Korea-a total of 1 million bpd-would "fall to minimal levels".

Brent for September settlement advanced 46 cents to end the session at US$77.76 a barrel on the London-based ICE Futures Europe exchange.