Trump blasts OPEC 'monopoly' for higher oil prices

Sean Reid
September 23, 2018

Oil prices see-sawed in a volatile, heavy day of trading on Friday, selling off after news that major producers would consider additional supply one day after U.S. President Donald Trump again blasted the cartel.

"We're stuck in a range here", said Tariq Zahir, managing member at Tyche Capital Advisors in NY, with prices supported by the USA sanctions on Iranian supplies and pressured by the potential that Chinese demand could wane.

Futures prices for WTI crude, the USA benchmark, dipped slightly following the tweet and were lower by 0.2% on the day. USA crude oil accounted for 19 percent of total East Coast crude inputs for the first half of 2018, compared with 48 percent in the same period of 2015, when the Brent-WTI price spread also averaged $5 per barrel.

Data from the InterContinental Exchange showed open interest in calls that give the owner the right to buy Brent futures at $80 and $85 by next week grew by almost 45 per cent on Monday and Tuesday to an equivalent of 54 million barrels of oil.

The weekend gathering will discuss how to share the previously agreed output increases and examine whether the market needs more oil to offset the loss of Iranian supply as well as a decline in Venezuelan output, the sources said.


For this year's April-to-September driving season, the Energy Information Administration expects U.S. petrol prices to be up 19% from a year ago, mostly because of expectations for higher crude-oil prices.

The rebound gained steam earlier this year after production problems in countries like Venezuela and Libya caused the group to cut more deeply than they intended.

Decisions are only binding when they are made by all OPEC member states, Zanganeh said, adding that he "will block any decision posing threats to Iran".

Such technical arguments may inflame passions inside OPEC delegations, but they're drowned out by Trump's Twitter bullhorn, which was blasting loud and clear on Thursday.

United States sanctions on Iran's oil exports come into force in November, with supply from the country already at two-year lows.


Prices dipped as low at $70 in London in August, but have since risen as American sanctions began to significantly curb Iran's oil exports.

USA sanctions affecting Iran's oil exports come into force on November 4 and many buyers have already scaled back Iranian purchases.

"As more evidence gathers that Iranian oil exports are heading sharply down, the more emboldened the oil market is likely to be to test, and breach this level".

A change in the law allowing U.S. companies to export crude oil for the first time in 40 years also came into effect in 2015, further boosting production.

Prices have traded mostly below $80 over the past few months on fears trade tensions between the US and China could damp global demand. It's the first time since 1973 that the United States is leading the world in oil output.


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