Trump’s tweets have added $10 to oil prices, Iran’s OPEC boss says

Gladys Abbott
July 6, 2018

"The responsibility of paying unnecessary prices for oil by all consumers of the whole world, especially in USA gas stations, is exclusively upon your (Trump's) shoulders and the price of over $100 per barrel is yet to come", Kazempour said.

Prices were also pushed up by looming U.S. sanctions against Iran, which threaten to cut supplies to an already tight market despite pledges by producer cartel OPEC to raise output to make up for the disruptions.

The US president has spent recent months putting pressure on the Opec cartel, which pumps about a third of the world's crude oil, to reduce prices by increasing its output and yesterday he accused its members of "doing little to help".

In addition to pressing Saudi Arabia to pump as much as 2mmb/d more to an unprecedented 12mmb/d, an amount many doubt the Saudi can maintain for an extended period of time - think Tesla making Model 3s - the Trump administration has also been pushing countries to cut all imports of Iranian oil from November when the USA re-imposes sanctions against Tehran, after Trump withdrew from a 2015 nuclear deal agreed between Iran and six major powers.

A survey of analyst expectations from S&P Global Platts revealed expectations of a drain on US crude oil inventories of 4.5 million barrels last week, adding support to the concerns about a market deficit. The United States under President Barack Obama led negotiations of that deal, but Trump has withdrawn from the agreement and is reimposing sanctions on those doing business with Iran.

President Trump has ramped up his Twitter assault on the Organization of the Petroleum Exporting Countries and high oil prices, but experts say the president's own push to cut off Iran's oil sales is the biggest reason oil prices have gone up recently.

"OPEC has not defined oil prices for the past 30 years", Kazempour said.

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The price of West Texas Intermediate crude oil is now around $74 a barrel. The price of diesel fuel used largely by truckers was $3.17 a gallon, up 30 percent from a year ago, AAA said.

Brent crude futures LCOc1 were at $77.82 per barrel, up 6 cents from their last close. Inventories at Cushing, Oklahoma, fell 2 million barrels last week, according to a separate forecast compiled by Bloomberg.

US crude stockpiles are forecast to have declined 5 million barrels last week, according to a Bloomberg survey ahead of government data to be released on Thursday.

"One factor behind the drawdown has been USA crude exports, which have shot higher to help fill the void left in Europe and Asia by the voluntary and involuntary reductions from OPEC producers", he said in emailed remarks.

The White House is threatening countries which import Iranian oil to stop shipments by November - or face U.S. sanctions.

This time around, the US sanctions and the tough USA approach to try to cut off as many Iranian oil barrels as possible have spooked banks, insurers, and shippers, who have started to wind down business with Iran for fear of coming under secondary sanctions.

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