Oil prices at four-year high after OPEC rebuffs Trump

26 September, 2018, 13:51 | Author: Salvatore Jensen
  • Crude Oil

"I do not influence prices", Saudi Energy Minister Khalid Al Falih told reporters on Sunday.

The Organisation of the Petroleum Exporting Countries (OPEC) along with Russian Federation and other non-OPEC nations met in Algiers on Sunday to discuss the possibility of raising output but ruled out any increase.

Trump has been calling publicly for OPEC to help lower prices by producing more.

Iran says no country can ever compensate for its missing oil supplies to markets in case the US materializes its threat to bring the Islamic Republic's oil exports to zero with a top official saying that US President Donald Trump would sooner or later have a change of heart over his campaign to the same effect. Thus, prices are unlikely to rise as fast as and as high as they did in 2007/08 when the United States dollar weakened in response to Fed rates cuts.

One is Venezuela, which has been faced with a sharp fall in production amid a deepening economic crisis and the threat of USA sanctions.

Several ministers also offered general commitments to keep markets well supplied, without taking aggressive steps to do so.

"Given the numbers we saw today, that (an output increase in 2019) is highly unlikely unless we have surprises on the supply and demand", Falih added.

Higher gasoline prices for USA consumers could create a political headache for Republican Trump before mid-term congressional elections in November.

Saudi Arabia, the United Arab Emirates and Kuwait are supplying more crude to Cosmo Oil to replace its 10,000 barrels per day (bpd) shortfall from Iran, or 5 percent of the refiner's imports, he said.

In the meantime, he argued that OPEC and non-OPEC agreements signed so far are not just about boosting oil prices, but also about maintaining market stability.

"Our attention is shifting to 2019".

Kazempour Ardebili said the unfavorable conditions for the implementation of US oil sanctions against Iran could eventually forced US President Trump to show a certain level of flexibility. The US sanctions are expected to remove at least 1 million barrels of crude oil from the market per day. "So far, we have chose to stick to our June agreements", Novak said.

The U.S., which isn't an OPEC member and has in recent years seen a renewed boom in shale oil, will continue to grow as a crude producer, peaking in the late 2020s.

On Sunday, Opec and its allies at a meeting in Algiers ruled out any immediate boost in crude output but reassured the market that they would do whatever is necessary to balance the supply.

It said non-OPEC would produce 66.1 million bpd of crude and liquids in 2023, up from 57.5 million bpd in 2017. Opec estimates that coal usage in the OECD countries will plummet by a third by 2040, but it will increase by 20 per cent in developing countries to reach five times the volumes burned in the west. The Saudi minister said returning to 100 per cent compliance was the main objective and should be achieved in the next two to three months.

"We don't believe Opec can actually raise output significantly in the near term, as the physical spare capacity in the system is not that high".


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