Economy

Iranian oil minister calls Trump's order to OPEC insulting

Iranian oil minister calls Trump's order to OPEC insulting”

The president is right that oil prices are rising, and he's partly correct that OPEC is "doing little to help", insofar as OPEC isn't producing enough oil to cope up with market demand.

The U.S.is reimposing sanctions on Iran, after President Donald Trump withdrew the U.S. from the Iran nuclear agreement in May.

The U.S.is demanding zero purchases of Iranian oil by November, and if that were possible, oil could spike above $120 per barrel, given global crude supplies, says Bank of America Merrill Lynch. But Trump has also asked Saudi Arabia to tap its 2 million barrel spare capacity and add more oil to the market.

Zanganeh added: "Trump's order to OPEC members to increase production is a great insult to those governments and nations, and destabilises the market". OPEC and other producers, including Russian Federation, agreed in June to increase output by around a million barrels a day, reversing course after supply cuts that cleared a global glut and boosted prices.

"When we look at Saudi production and exports going back to 1970, we can observe that the highest annual oil production recorded was 10.4mn b/d in 2016, and Saudi has never produced more than 10.6mn b/d of oil on average over a single month", he wrote.

Hossein Kazempour Ardebili, Iran's ambassador to the OPEC, said the strong rhetoric by Trump against OPEC and oil producers could soon push up crude prices to as high as 100 US dollars per barrel. Two other sources also said South Korea cancelled July loadings of crude and condensate cargoes from Iran as it was uncertain whether they can receive an exemption from USA sanctions on Iran trade.

Now, President Trump is threatening sanctions against any country that continues to do business with Iran.

"Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue from crude oil sales", a senior State Department official told a news briefing this month.

The International Energy Agency estimates OPEC members held 3.4 million bpd of spare capacity at the end of May, while their non-OPEC allies had no more than 330,000 bpd ("Oil Market Report", IEA, June 2018).

South Korea has bought almost 296,000 barrels of oil from Iran in the first five months of the year, and is the biggest buyer of Iranian oil after China and India.

Oil prices rebounded strongly following the message from the U.S. Department of State.

Oil prices rose on Tuesday on escalating concerns over potential supply shortages, with Brent crude leading the way as hundreds of oil workers in Norway were set to strike later in the day.

South Korean buyers of Iranian crude and condensate are SK Energy and SK Incheon Petrochemical, owned by SK Innovation, Hyundai Oilbank Corp and Hanwha Total Petrochemical Co.



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