Oil price up as Trump calls OPEC to lower prices

Irving Hamilton
September 24, 2018

Sunday's meeting in Algiers brought together OPEC oil ministers and non-OPEC signatories to the 2016 agreement as they seek to extend their cooperation.

"Our plan is to meet demand", said Saudi Energy Minister Khalid Al-Falih.

Benchmark Brent oil reached $80 a barrel this month, prompting Trump to reiterate his demand on Thursday that the Opec lower prices.

Oil prices increased as USA markets tightened just weeks ahead of Washington's plan to impose new sanctions against Iran.

Non-member production overall is forecast to rise by 8.6 mbd to 66.1 mbd by 2023 on higher global demand, the report added, but a relative tapering off from 2020 will see cartel members' crude production shrug off a medium-term trend fall, OPEC predicted. "We expect that those OPEC countries with available spare capacity, led by Saudi Arabia, will increase output but not completely offset the drop in Iranian barrels", said Edward Bell, commodity analyst at Emirates NBD bank. Furthermore, it leaves the market extremely vulnerable to supply disruptions.

The threats of disruption as well as the early supply cuts have helped to lift Brent crude futures to almost $80 a barrel this month, a level not seen since 2014.

The statement from Trump, meanwhile, was not his first criticism of OPEC.

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Looking ahead, crude oil prices await the release of US Energy Information Administration and Department of Energy inventory figures later this week.

Zanganeh was referring to a tweet by Trump in which he linked US support for Middle Eastern countries to oil prices on Thursday and again urged OPEC to lower prices.

Iranian Oil Minister Bijan Namdar Zanganeh said Iran will definitely veto any decision which threatens its interests.

Zangeneh did not attend the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) held in Algeria on Sunday.

Further, oil prices are likely cheering the signs of tightening in the United States market ahead of Iran sanctions. That suggests OPEC's power to influence the market will be tempered by US production for about another decade.

"Our attention is shifting to 2019. We will remember", Trump tweeted.

Russian Energy Minister Alexander Novak said no immediate output increase was necessary, although he believed a trade war between China and the United States as well as USA sanctions on Iran were creating new challenges for oil markets.

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