Breaking News
0

Trump, Iran spar over oil prices ahead of OPEC meeting

CommoditiesJun 13, 2018 12:18PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A man fixes a sign with OPEC's logo next to its headquarter's entrance in Vienna 2/2

By Susan Heavey and Alex Lawler

WASHINGTON/LONDON (Reuters) - U.S. President Donald Trump and Iran exchanged sharp words over oil prices on Wednesday, with Trump blaming OPEC for high oil prices and Tehran accusing him of stoking volatility after he withdrew last month from a global nuclear arms deal with Iran.

Trump sparked the latest back-and-forth when he renewed his attack on OPEC in a tweet that said oil prices are too high and that the cartel was "at it again."

Oil prices have risen by around 60 percent over the last year after the Organization of the Petroleum Exporting Countries and some non-OPEC producers, including Russia, started reducing supplies in 2017. The cartel meets June 22-23 in Vienna, and producers are seen as likely to raise production, perhaps before the limits are due to sunset at year-end.

Iran's OPEC governor, Hossein Kazempour Ardebili, fired back quickly at Trump's words. "You cannot place sanctions on two OPEC founder members and still blame OPEC for oil price volatility," he said in a statement to Reuters, referring to his country and Venezuela. "This is business, Mr. President - we thought you knew it."

The oil supply deal is set to continue through the end of 2018, but plans for its continuation were unclear. The calculus changed after Trump announced in May that the United States was pulling out of the 2015 deal that restricted Iran's nuclear program in exchange for the removal of sanctions.

The U.S. move has put pressure on European and Asian clients to stop importing Iranian oil or doing business with the country. Saudi Arabia, Iran's rival and the largest producer in OPEC, and Russia, the world's largest producer and a party to the deal, have already increased supply. Saudi Arabia supported Trump's decision to exit the Iran nuclear agreement.

"I think the Trump tweet makes the Saudi's job of getting compromise at the OPEC meeting tougher," said Joe McMonigle, senior energy policy analyst at Hedgeye Potomac Research in Washington.

Saudi production rose to 10.03 million barrels per day (bpd in May, in line with deal quotas, according to OPEC data. Russia's production was 11.1 million barrels a day in the beginning of June, exceeding its quota, according to sources familiar with the matter.

The price of Brent crude peaked in May at $80.50 a barrel, then pulled back, trading on Wednesday near $76 at barrel, partly in anticipation that the deal may end.

"Oil prices are too high, OPEC is at it again. Not good!" Trump wrote in his post on Twitter after last raising the issue in April.

The potential for OPEC to boost production has raised concerns about the cartel's limited spare capacity, which could fall to as low as 2 million bpd. This would make it harder to respond to a supply shock, such as out of Venezuela, where output has declined to a 33-year-low due to an economic crisis.

"OPEC has the lowest spare capacity ever right now," said fund manager Pierre Andurand, in a tweeted response to Trump. "There is going to be a real issue," he wrote, predicting prices above $150 per barrel within two years.

In the United States, gasoline pump prices nationwide have risen to near $3 a gallon during the peak summer travel season, still less than the $4 a gallon during the 2007-2009 Great Recession. Gasoline demand has remained strong, rising to an estimated 9.9 million bpd as of last week, according to U.S. Energy Department data.

Trump sent out his tweet hours after returning to Washington from a summit with North Korean leader Kim Jong Un in Singapore. It was not immediately clear what prompted his comment.

Trump, Iran spar over oil prices ahead of OPEC meeting
 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email