The Trump-Saudi campaign to calm oil markets will by tested severely in the coming months as sanctions bite deeper into Iran's exports, risking even higher crude prices. The president said the US defends many OPEC member states, insinuating that as a returned favor, these nations should cave to Washington's demands.
OPEC and Russian Federation announced in June they were willing to raise output to address concerns of emerging supply shortages due to unplanned disruptions from Venezuela to Libya, and likely also to replace a potential fall in Iranian supplies due to US sanctions.
"Your tweets have increased the prices by at least $10". It went down when USA shale producers started pumping more, taking advantage of the higher price.
It seems his earlier hope that Saudi Arabia would increase its output by 2 million barrels a day were dashed.
The early reaction to Trump's tweet was normal. Although the sanctions don't take full effect until November, expectations have already added uncertainty to markets. He said Sunday that OPEC should put another 2 million barrels on the market to make up for the coming shortfall in Iranian crude sales due to sanctions. OPEC is doing something to help with its recent agreement to raise production but may soon use up its entire spare capacity.
The decline in fuel inventories was largely down due to the outage at Syncrude Canada's 360,000 barrels per day oil sands facility near Fort McMurray, Alberta.
The state oil company, known as Saudi Aramco, cut pricing for a key crude grade to Asia, its biggest market. The U.S. average for a gallon of regular unleaded was $2.86 as of Thursday, with Louisiana below that rate at almost $2.58, according to the American Automobile Association.
"OPEC has not defined oil prices for the past 30 years", Kazempour continued. Jimmy Carter struggled with high gas prices, which had doubled since the Iranian revolution.
In his bid to halt the flow of Iranian oil without raising prices, Trump has urged Saudi Arabia and other OPEC members to increase their output.
Oil prices climbed down from their 3 ½ year high to reach US$73 per barrel, with Brent trading at US$76.96 Tuesday afternoon.
U.S. West Texas Intermediate (WTI) crude futures were down 11 cents at $74.03. Jimmy Carter struggled with high gas prices, which had doubled since the Iranian revolution.
"The more that Saudi Arabia adds to the market, the less of a supply cushion we have - that's a bullish twist to a bearish development", said Yawger at Mizuho.
Trump might have good reason to worry about gasoline prices being used against him and his fellow Republicans.
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