Economy

Trump accuses OPEC of raising oil prices

Trump accuses OPEC of raising oil prices”

Barely recovered from the roller coaster ride of recent weeks, traders are holding their breath for the June 22 meeting of oil ministers from OPEC member states in Vienna.

Oil has retreated from the highs of May as Saudi Arabia and Russian Federation signaled they may increase output later this year to counter supply losses from other producers, while U.S. President Donald Trump is also pressuring them to temper crude prices.

Oil prices have risen by around 60 percent over the previous year after the Organization of the Petroleum Exporting Countries and some non-OPEC producers, including Russian Federation, started withholding output in 2017 to reduce excess supply.

Iran's OPEC governor, Hossein Kazempour Ardebili, fired back quickly at Trump's words.

Lukman Otunuga, analyst at futures brokerage FXTM, said higher oil production and forecasts of more to come were undermining prices.

He last raised the issue in April.

Rising oil output by the world's third biggest producer, the U.S., is also affecting prices.

While Nigeria reported diminishing oil exports in the wake of force majeure on Bonny Light oil, both Saudi Arabia and Russian Federation this week reported increased oil production for the month of May, at 10.0 million bpd and 11.09 million bpd respectively, sending mixed signals to the oil market.

"To make up for the losses, we estimate that Middle East OPEC countries could increase production in fairly short order by about 1.1 mb/d and there could be more output from Russian Federation on top of the increase already built into our 2019 non-OPEC supply numbers", it added.

The U.S. move has put pressure on European and Asian clients to stop importing Iranian oil or doing business with the country.

An oil production shortfall in Iran and Venezuela may force OPEC and Russian Federation to decide later this month to open their taps, the International Energy Agency said Wednesday.

However, it is unclear whether other nations will commit to raising production.

With output in Russian Federation rising back above 11 million bpd in June and Saudi production climbing back above 10 million bpd, supplies from the top three producers are increasing.

In the United States, rising gasoline prices have threatened to blunt other economic headwinds. Prices nationwide have edged up toward $3 a gallon as the US hits its peak summer travel season, still less than the $4 a gallon during the 2007-2009 Great Recession.

After Trump tweeted his unhappiness with the price of oil in April, the price of oil fell.



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