Why Trump is pressing Saudi Arabia to lower oil prices: Kemp

Why Trump is pressing Saudi Arabia to lower oil prices: Kemp

Paradoxically, U.S. President Donald Trump, with one eye on the U.S. driving season ahead of the U.S. 4 of July holiday, has been grumbling about high oil prices and on Jun.30 tweeted that he had directly asked Saudis to open the taps to make up for the shortfall.

As the 2018 mid-term elections loom, Trump's threat to the Saudi-led OPEC oil cartel is a sign to voters that he's doing something about rising prices at the pump (even if it's just sending tweets).

"This must be a two way street", he wrote, adding in block capitals, "REDUCE PRICING NOW!" The Organization of the Petroleum Exporting Countries controls a third of production while the world's biggest consumer can, at the order of the president, release part of the 660 million barrels of crude held as a strategic reserve. Moreover, Obama was able to do this without increasing oil prices because a surge in USA shale oil drilling more than offset lost Iranian exports.

Crude oil prices in recent days have hit their highest levels since late 2014.

The White House said Saturday that Saudi Arabia's King Salman bin Abdulaziz Al Saud agreed to raise output after the Trump administration ordered all countries to stop buying oil from Iran by November.

More news: HOURS OF DISCOUNTS: Amazon extending deals on Prime Day July 16

Prices were also pushed up by looming USA sanctions against Iran, which threaten to cut supplies to an already tight market despite pledges by producer cartel OPEC to raise output to make up for the disruptions. The global community had expected sanctions waivers for some countries, a tactic used in the Obama era to avoid supply shocks.

"Your tweets have driven the prices up by at least $10 per barrel", OPEC Governor Hossein Kazempour Ardebili said, according to the Iranian Oil Ministry's Shana news service.

"You are hammering on good guys in OPEC", Kazempour said, according to Bloomberg.

Oil was trading at over $78 per barrel of the Brent benchmark on Thursday, while US West Texas Intermediate was trading at $74.55. The International Energy Agency estimates OPEC's spare capacity could fall in to around 2.5 mbpd (excluding Iran) - by the first half of 2019, its lowest level since the end of 2016 when record production from the Middle East reduced spare capacity to around 1.9 million bpd. "OPEC has not defined oil prices for the past 30 years, it is a financial market and regional hubs for marker crudes who does it?" Early on Thursday, Brent Crude was down 0.5 percent at $77.77.

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