US President Donald Trump has criticised the Organisation of Petroleum Exporting Countries (OPEC) and its members for taking undue advantage of oil consuming nations by keeping oil prices high.
Trump, who spoke at the United Nations General Assembly in New York yesterday, lashed out at OPEC and its allies for keeping oil price high, saying that high oil prices negatively affect the economies of the world. He urged oil consuming nations not to rely on OPEC, stressing the importance of energy independence.
He said: “OPEC and OPEC nations are as usual, ripping off the rest of the world, and I don’t like it, nobody should like it. We defend many of these nations for nothing and then they take advantage of us by giving us high oil prices,” stressing, “it ‘s not good.” He called on other nations not to rely on OPEC, lamenting the dependence Germany has on Russia.
The U.S. President spoke against the backdrop of rising oil price, which rose Monday to a four year-high at $81 per barrel and to $82 per barrel yesterday.
Oil prices jumped more than two per cent to a four-year high on Monday after Saudi Arabia and Russia ruled out any immediate increase in production. The refusal of OPEC to raise production negates the call by Trump for action to raise global supply.
Benchmark crude, Brent hit its highest since November 2014 at $80.94 per barrel, up $2.14 or 2.7 per cent, before easing to around $80.75 dollars. U.S. light was $1.25 higher at $72.03.
“This is the oil market’s response to the OPEC and allies’ refusal to step up its oil production,” said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.
OPEC leader Saudi Arabia and its biggest oil-producer ally, Russia, on Sunday rebuffed a demand from Trump for moves to cool the market.
Iranian Minister of Petroleum has welcomed OPECs decision effectively rebuffing President Donald Trump’s calls for a hike in oil output, saying US empty dream to zero Irans oil exports would not realize. ‘The US seeks to reduce Iranian oil exports to zero even for a month, but that dream would not come to reality,’ Bijan Zangeneh said on Monday.
Crude oil prices touched new four-year highs yesterday as Brent crude – the international benchmark for crude oil – touched $82.20 a barrel. That marked a level beyond the last peak witnessed in November 2014. Expectation of a tightening supply in the global oil market in the coming months has pushed crude oil prices higher, say analysts. The impending sanctions by the United States on Iran, the third-largest producer among OPEC, which will go into effect November 4, the rising domestic petrol and diesel prices, which touched new record highs in the backdrop of continued weakness in the rupee against the US dollar, and the high crude oil prices that tend to widen the current account deficit for India, which meets more than 80 per cent of its oil requirement through imports, contribute to high oil prices.
The International Energy Agency (IEA) forecasts strong oil demand growth of 1.4 million barrels per day (bpd) this year and 1.5 million bpd in 2019, and said in its most recent report that the market was tightening.
OPEC and non-OPEC including Russia, Oman and Kazakhstan, met at the weekend to discuss a possible increase in crude output. However, the upshot of the gathering was that the group was in no rush to do so.
“After the weekend’s meeting, the voices of those who foresee 100 dollars a barrel and compare the current backdrop to the 2007/2008 bull run are getting louder,” said PVM Oil Associates strategist Tamas Varga.
“Undoubtedly the oil market is expected to be tight in coming months and, if OPEC’s own numbers are to be believed, global oil inventories are to fall during the remainder of the year.”
Richard Robinson, manager of the Ashburton Global Energy Fund, said higher prices are almost certainly on the cards. “We believe the combination of tight supply, healthy demand, falling global inventories – down from already under-stored levels – and anemic spare capacity helps support an oil price that could end the year above 90 dollars,” he said.
Analysts expect crude oil prices to stay under pressure on the back of a deadlock on supply between the top producers and the world’s largest economy.
Release of US crude data will be watched closely by oil investors going forward. “Given the current oil market scenario, we believe prices of crude oil are to rise around $78/bbl -$80/bbl unless the number of rigs deployed by the by the United States are increased,” said credit ratings agency CARE Ratings.