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Crude Price Falls On Saudi Arabia Production Increase, CAD Follows
05 July 2018, 04:13 | Kelvin Horton
US President Donald Trump sent a message on Twitter that he asked Saudi Arabia to increase oil output by 2 million barrels because "prices to (sic) high".
Saudi Arabia later acknowledged a call had taken place between Trump and Saudi Arabia's King Salman, but did not mention any production targets.
While U.S. sanctions against Iran may prompt Asian buyers, including Japan and South Korea, to cut back purchases from OPEC's third-biggest producer- or even halt buying completely - China may be more willing to continue importing and pick up additional barrels, undercutting Saudi supplies, he said.
"Your tweets have driven the prices up by at least $10 per barrel", Iran's OPEC governor Hossein Kazempour Ardebili said the message, Bloomberg reported, citing the Iranian Oil Ministry's Shana news service. "So, in terms of the USA, here, we've seen oil prices rise in the aftermath of the OPEC meeting".
"We are working to minimize disruptions to the global market but we are confident there is sufficient global spare oil capacity". Hopefully, the decision would help stabilize the oil prices and contribute towards mitigating woes of billions of people worldwide.
Last month, Saudi Energy Minister Khalid Al-Falih said OPEC would increase production by about 1 million barrels daily, though Nigerian Oil Minister Emmanuel Ibe Kachikwu said the boost would amount to 700,000 barrels each day in the second half of 2018. Republican presidents, especially George H.W. Bush and his son, used diplomatic channels with Saudi Arabia, the world's biggest exporter which pumps nearly one-third of OPEC's output.
Trump's interventions with tweets "unsettle" the market and appear to have pushed prices up, Standard Chartered Plc energy analyst Emily Ashford and head of commodities research Paul Horsnell wrote in a note on Tuesday (July 3).
Brent oil rose on Wednesday, driven higher by a threat from an Iranian commander and a drop in US crude inventories for the second week in a row.
"Iranian crude oil will be offered on the bourse and the private sector can export it in a transparent way", First Vice President Eshaq Jahangiri told an economic event in Tehran broadcasted live on state television.
Trump has been complaining about OPEC at the same time that Washington is piling pressure on its European allies to stop buying Iranian oil.
"If Libya's oil doesn't return fast to the market it will be an important test to OPEC's spare capacity, especially given that output from Venezuela and Iran is expected to fall significantly in the next couple of months", he added. Many of them, like Saudi Arabia, rely on oil exports to finance their government budgets. That's knocked about 850,000 barrels a day out of the global oil market.
That kind of talk is part of a broader game Saudi Arabia played to master the oil market. He added that it is "incorrect and unwise" to think that "one day all oil producing countries would export their surplus oil and Iran would be the only country that can not export its oil". And you say it is a two-way road!?
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