Donald Trump, President of the United States
The President of the United States, Donald Trump has accused the Organisation of Petroleum Exporting Countries (OPEC) and its members for taking undue advantage of oil consuming nations through making oil prices high.
The American president made this assertion during his address at the United Nations General Assembly in New York criticising OPEC and its allies for making oil price high, noting that high prices negatively affect the economies of the world.
Trump urged the consuming nations not to rely on OPEC as he emphasised on the importance of energy independence throughout the globe.
According to him, “OPEC and OPEC nations are as usual, ripping off the rest of the world, and I don’t like it, nobody should like it. We defend many of these nations for nothing and then they take advantage of us by giving us high oil prices. Not good.”
Trump called on other nations not to rely on OPEC, lamenting any dependence Germany has on Russia.
The U.S. President spoke against the backdrop of rising oil price which rose to a four-high of $81 per barrel and to $82 per barrel.
Oil prices plunged more than two per cent to a four-year high after Saudi Arabia and Russia ruled out any immediate increase in production. The refusal of OPEC to raise production negates the call by Trump for action to raise global supply.
Benchmark crude, Brent hit its highest since November 2014 at 80.94 dollars per barrel, up 2.14 dollars or 2.7 per cent, before easing to around 80.75 dollars. U.S. light was 1.25 dollars higher at 72.03 dollars.
An analyst at Commerzbank in Frankfurt, Germany, Carsten Fritsch asserted “This is the oil market’s response to the OPEC and allies’ refusal to step up its oil production.”
OPEC leader Saudi Arabia and its biggest oil-producer ally, Russia have rebuffed a demand from Trump for moves to cool the market.
However, Iranian Minister of Petroleum has welcomed OPECs decision effectively rebuffing President Donald Trump’s calls for a hike in oil output, saying, US empty dream to zero Iran’s oil exports would not be realized. Bijan Zangeneh said, “The US seeks to reduce Iranian oil exports to zero even for a month, but that dream would not come to reality.”
Crude oil prices touched new four-year high as Brent crude – the international benchmark for crude oil – touched $82.20 a barrel. That marked a level beyond the last peak witnessed in November 2014. Expectation of a tightening supply in the global oil market in the coming months has pushed crude oil prices higher, say analysts. The impending sanctions by the United States on Iran, the third-largest producer among OPEC, which will go into effect November 4, the rising domestic petrol and diesel prices, which touched new record highs in the backdrop of continued weakness in the rupee against the US dollar, and the high crude oil prices that tend to widen the current account deficit for India, which meets more than 80 per cent of its oil requirement through imports, contribute to high oil prices.
However, the International Energy Agency (IEA) forecasts strong oil demand growth of 1.4 million barrels per day (bpd) in 2018 and 1.5 million bpd in 2019, and said in its most recent report that the market was tightening.
OPEC and non-OPEC including Russia, Oman and Kazakhstan, met and discussed a possible increase in crude output. The upshot of the gathering was that the group was in no rush to do so.
After the weekend’s meeting, the voices of those who foresee 100 dollars a barrel and compare the current backdrop to the 2007/2008 Bull Run are getting louder. Undoubtedly, the oil market is expected to be tight in coming months and if OPEC’s own numbers are to be believed, global oil inventories are to fall during the remainder of the year.
On the issue of OPEC and world crude oil, Richard Robinson, manager of the Ashburton Global Energy Fund, said higher prices are almost certainly on the cards. “We believe the combination of tight supply, healthy demand, and falling global inventories – down from already under-stored levels – and anemic spare capacity helps support an oil price that could end the year above 90 dollars.”
Analysts expect crude oil prices to stay under pressure on the back of a deadlock on supply between the top producers and the world’s largest economy.
Credit Rating Agency (CARE), gave its insight in its release of US crude data that it will be watched closely by oil investors going forward. “Given the current oil market scenario, we believe prices of crude oil are to rise around $78/bbl -$80/bbl unless the number of rigs deployed by the by the United States are increased,” the agency added.
Commodity merchants Trafigura and Mercuria have predicted that crude oil prices will touch $100 a barrel by the end of 2018. Bank of America Merrill Lynch lifted its average Brent price forecast for 2019 from $75 per barrel to $80 a barrel.
After the sanctions on Iran exports come into effect, oil prices are likely to go even higher given an expected drop in supply from major producers in Iran and Venezuela.
Besides, spot trade remained fairly slow as a major industry event in Asia kept activity in both Nigerian and Angolan cargoes subdued, and traders reported little in the way of offers.