Crude oil price hits $34 as Trump lobbies Saudi Arabia to cut production
Crude oil prices rose above $30 on Friday after indications that oil-producing partners of the Organisation of Petroleum Exporting Countries, also known as OPEC+, would hold a meeting on Monday.
Donald Trump, president of the United States, had said a production cut as high as 15 million barrels may be implemented.
He, however, did not indicate if the US would join in cutting production.
“Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 million barrels, and maybe substantially more which, if it happens, will be great for the oil & gas industry,” he tweeted.
“Could be as high as 15 million barrels. Good (great) news for everyone.”
After Trump tweeted, the Kingdom of Saudi Arabia released a statement calling for an urgent meeting of OPEC+ and other countries to reach a “fair agreement”.
“The Kingdom of Saudi Arabia would like to draw attention to the efforts it has exerted during the past period to reach an agreement within OPEC + group to restore equilibrium in the oil market as it has garnered the support of as many as 22 countries within OPEC + group, but it was not possible to reach an agreement due to lack of consensus,” the statement published by Saudi press agency read.
“Today, the Kingdom calls for an urgent meeting for OPEC+ group and other countries, with the aim of reaching a fair agreement to restore the desired balance of oil markets.
“This invitation comes within the framework of the Kingdom’s constant efforts to support the global economy in this exceptional circumstance, and in appreciation of President Donald Trump of the United States of America’s request and the US friends’ request.”
OPEC ‘optimistic’ about stable oil market — despite renewed US sanctions on Iran
Mohammad Barkindo, secretary general of the Organisation of Petroleum Exporting Countries (OPEC), on Tuesday, expressed optimism that OPEC-led efforts to stabilise the oil market will be maintained.
US President Donald Trump announced a withdrawal from the Iran nuclear deal forged under the Obama administration and restored sanctions on Tehran suspended under the 2015 accord
Iran is OPEC’s third-largest oil producer, accounting for exports of up to 2.5 million barrels a day (b/d).
Renewed US sanctions could potentially cause drastic reductions in Iran’s exports, leading to undersupply and higher oil prices, thereby shifting the market to a state of disequilibrium.
OPEC, along with 10 non-OPEC members led by Russia, are in the midst of a 1.8 million b/d supply cut agreement that is scheduled to run through the end of 2018.
“We have confidence in our leaders, within and outside OPEC, who have strongly supported our joint efforts with our non-OPEC partners to assist the oil market to restore stability after the worst oil cycle in history, to continue to provide leadership in these uncertain times,” Barkindo said early Tuesday in comments to Reuters.
“The rebalancing of the oil market is a long process that is now in its 4th year. It is still a work in progress and requires sustainability.”
Suhail al-Mazrouei, UAE energy minister, also indicated OPEC would remain committed to its production cuts despite US sanctions on Iran.
“Collectively, we will continue to focus on these goals,” he said.
Working collaboratively with our partners, our joint efforts to rebalance the oil market and bring investment back into our industry are progressing well. Collectively, we will continue to focus on these goals.
— سهيل المزروعي (@HESuhail) May 8, 2018
Trump berates OPEC for ‘artificially’ high oil prices — and Barkindo responds
US President Donald Trump has accused the Organisation of Petroleum Exporting Countries (OPEC) of “keeping oil prices artificially very high.”
In tweet, Trump said the cartel’s pricing cycle “will not be accepted” as there is no scarcity of oil supply to warrant such “high prices.”
Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!
— Donald J. Trump (@realDonaldTrump) April 20, 2018
But OPEC secretary general, Mohammad Barkindo, in a swift response, said the US oil and gas industry benefits from the cartel’s efforts to restore stability in the market.
He was speaking from Jeddah, Saudi Arabia.
“We in OPEC pride ourselves as friends of the United States who have vested interest in their growth, development and prosperity,” he said, adding that OPEC, non-OPEC deal “has not only arrested the decline but rescued the oil industry from imminent collapse and is now on course to restore stability on a sustainable basis in the interest of producers, consumers and the global economy”.
Oil prices recorded slight increase on Friday ahead of a meeting by members of the joint OPEC and non-OPEC ministerial monitoring committee (JMMC) meeting, same day.
As at Thursday, OPEC daily basket price stood at $70.96 a barrel, compared with $69.39 on Wednesday, according to calculations by the secretariat.
But West Texas Intermediate (WTI) crude, rose to $68.53 a barrel on Friday, from $68.29 a barrel on the New York Mercantile Exchange on Thursday.
Similarly, Brent crude, the global benchmark inched above the $73 mark on Friday, the highest since 2014.
Expectations are high that the OPEC and non-OPEC JMMC gathering will announce a specific timeline for further extension of its production cap agreement.
CNBC reports that Trump’s agitation may be fueled by news that major oil producers may be targeting much higher oil prices.
Saudi Arabia, a key OPEC member, has conveyed desire to see crude prices at around $80 or even $100 a barrel.
This is partly due to the kingdom’s planned initial public offering of Saudi Aramco, its state oil company.
Speaking in an interview with Bloomberg TV, Barkindo said “geopolitical tensions in the Middle East (Iran) have brought back a premium to crude oil prices”.
According to him, “it wouldn’t be in the interest of producers or consumers to see a price shock” if Iran leaves the cartel based on US “re-imposed” sanctions.