Published: Mon, July 09, 2018
Markets | By Erika Turner

Oil price slashed by Saudi Arabia after Trump slams OPEC monopoly

Oil price slashed by Saudi Arabia after Trump slams OPEC monopoly

U.S. President Donald Trump again accuses the Organization of Petroleum Exporting Countries of driving gas prices higher on Twitter on Wednesday. "This must be a two way street, REDUCE PRICING NOW!"

In other news, late Tuesday while traders were already preparing for the U.S. Independence Day holiday, the American Petroleum Institute (API) reported another major draw of $4.5 million barrels of U.S. crude oil inventories during the week-ending June 29.

Brent crude oil edged up Wednesday after a second consecutive drop in US crude inventories, driven by an outage at the Syncrude Canada oil sands facility, which usually supplies the U.S.

"A key driver of the rise in prices has been the OPEC-Russia deal to cut oil output, compounded by collapsing Venezuelan production and the US decision to end the Iran deal", National Australia Bank (NAB) said in its July outlook.

Trump in an earlier tweet and in an interview on Fox News last Sunday said he wanted oil exporters to provide an additional 2 million barrels a day of production.

Trading had been expected to be limited on Wednesday by the US national holiday, although the market has been more volatile.

If Gulf countries do not increase oil outputs to cover the shortfall left by Iran, America may not defend them, US President Donald Trump has warned in a tweet.

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

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USA crude inventories fell by 4.5 million barrels (MMBbl), to 416.9 MMBbl in the week ended June 29, the American Petroleum Institute (API) said Tuesday.

Inventories at Cushing, Oklahoma, the delivery point for USA crude futures, fell to their lowest level since December 2014.

"Increased Saudi crude availability that is being enhanced by reduced OSPs (official selling prices) into Europe and other regions is providing a strong counter against curtailed Libyan export activities", Ritterbusch wrote.

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.

In another bearish development for oil prices, reports and surveys show that Saudi Arabia had begun to raise its production in June, even if it agreed to start boosting output starting in July. And while USA shale oil production continues to rise, global demand for oil remains strong.

"A key driver of the rise in prices has been the OPEC-Russia deal to cut oil output, compounded by collapsing Venezuelan production and the US decision to end the Iran deal", National Australia Bank (NAB) said in its July outlook. This is a more harsh response than many analysts expected and, if it was to happen, could leave the global market undersupplied.

On Wednesday, Trump said OPEC is "driving oil prices higher", urging the cartel to reduce the price at the soonest.

Mounting global isolation in Venezuela, one of the founding members of OPEC, as well as US sanctions pressure has pushed its oil production to historic lows.

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