USA will 'absolutely' sanction European companies that do business with Iran

Trump said on Fox News' "Sunday Morning Futures" that European companies will face consequences as a result of the USA withdrawing from the Iran nuclear deal. "It is a real blow to OPEC, in part because of the impression the Saudis are following USA bidding, but mostly because Saudi Arabia and Russian Federation had stitched up a deal to raise production anyway even before the meeting".

'King Salman affirmed that the Kingdom maintains a two million barrel per day spare capacity, which it will prudently use if and when necessary to ensure market balance, ' read the statement.

The US ultimatum has also contributed to upward pressure on world oil prices, although Trump believes he has persuaded Saudi Arabia to offset this by ramping up its own production.

Saudi Arabia's output is up by 700,000 barrels per day (bpd) from May, a Reuters survey showed, and close to its 10.72 million bpd record from November 2016.

Iran is among the nations with the highest oil serves, along with Saudi Arabia, which is the world's leading exporter of oil.

"Your tweets have increased the prices by at least $10", Kazempour Ardebili said of Trump, according to news outlet SHANA. That was after Saudi Energy Minister Khalid al-Falih said the kingdom would honor the OPEC decision to stick to a 1-million-barrel increase.

Further, the American Petroleum Institute (API) crude oil inventories data showed that the U.S. crude inventories fell by 4.5 million barrels to 416.9 million barrels in the week to June 29.

"An unexpected build in the USA commercial crude inventory has prompted profit-taking", said Abhishek Kumar, Senior Energy Analyst at Interfax Energy in London.

President Trump wrote in the tweet that the "OPEC Monopoly must remember that gas prices are up & they are doing little to help", and that America defends many OPEC members for "very little" money. Oil hesitated at the start of the week, but traders are coming back to the buy side of the table as markets realized Saudi Arabia is in no rush to push oil prices higher again after recently pushing OPEC to lift production limits just last month.

Traders have also been watching USA oil production C-OUT-T-EIA, which has surged by 30 percent over the last two years to 10.9 million bpd, absorbing some of the recent disruptions.

Despite Monday's drop in oil prices, many analysts see oil prices likely to resume their upward climb, given a range of geopolitical factors.

Traders said the decline in fuel inventories was largely down to the outage at Syncrude Canada's 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta, which is expected to last through July.

Last week, a senior US State Department official described tightening the noose on Tehran as "one of our top national security priorities".

Trump's scramble to slow down the oil rally comes four months ahead of United States midterms, where analysts say rising gasoline prices could hurt Republicans. "We are working to minimize disruptions to the global market, but we are confident there is sufficient global spare oil capacity".