Oil: Prices have rallied, but OPEC will be key

09 July, 2018, 06:44 | Author: Kevin Carter
  • Global outages overshadow underwhelming OPEC output hike

"The OPEC Monopoly must remember that gas prices are up & they are doing little to help", Trump wrote on his personal Twitter account.

Saudi Arabia's state-run oil giant cut its prices on Thursday for first time since February after President Donald Trump lashed out at OPEC for rising USA gas prices. S. defends many of their members for very little dollars. This must be a two way street.

The producers' group and partners agreed on June 23 to increase oil production, with the Saudi and Russian energy ministers saying it would add about 1 million barrels a day to the market.

Recent price rises have also been spurred by a US announcement that it plans to re-introduce sanctions against Iran from November, targeting oil exports.

Harry Tchilinguirian, head of commodities strategy at BNP Paribas, said when an investor does not have a strong view on which way the price of crude oil futures might move, they tend to take a bet on options instead, to protect themselves. "REDUCE PRICING NOW!" Trump concluded the tweet. Trump's decision in May to pull out of the United Nations -backed nuclear agreement with Iran, meanwhile, means sanctions on the Iranian energy sector snap back into place in November.

Saudi Arabia told OPEC it pumped about 10.5 MMbopd last month as the kingdom sought to cap rallying prices by ramping up output, according to people familiar with the matter.

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The worldwide oil benchmark, Brent crude, was trading around $77.49 per barrel as of 8:20pm Nigerian time on Thursday. "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 outage at the 360,000 barrels per day (bpd) Syncrude facility in Canada has contributed to a sharp reduction in the discount for US crude versus Brent crude over the past month.

In May, the USA retreated from a multilateral deal with Iran regarding its nuclear disarmament program, and imposed sanctions to limit the world's fourth largest oil exporter's access to global markets.

Foreign ministers from the five remaining signatories of a nuclear deal between Tehran and world powers will meet Iranian officials in Vienna to discuss how to keep the accord alive after the US withdrawal from the pact.

Even if the US government grants some waivers to allies, FGE estimated 1.7 to 2 million bpd of crude and condensate would be cut out of markets once its sanctions are implemented.

The inventory report also showed an increase in imports, which "provided some relief.and showed that even with the Syncrude situation, all is not lost", Kilduff said. The U.S. government, meanwhile, is pressuring Iranian oil customers to cut exports to zero by November. 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".

Oil slipped towards $77 a barrel on Friday, under pressure from higher Saudi production and trade tensions between the United States and China, although oil supply disruptions lent support.

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