Oil prices at four-year high after OPEC rebuffs Trump




A horizontal drilling rig on a lease owned by Parsley Energy operates in the Permian Basin near Midland
A horizontal drilling rig on a lease owned by Parsley Energy operates in the Permian Basin near Midland  

By Christopher Johnson

LONDON (Reuters) - Oil prices jumped more than 2 percent to a four-year high on Monday after Saudi Arabia and Russia ruled out any immediate increase in production despite calls by U.S. President Donald Trump for action to raise global supply.

Benchmark Brent crude hit its highest since November 2014 at $80.94 per barrel, up $2.14 or 2.7 percent, before easing to around $80.65 by 1335 GMT. U.S. light crude was $1.30 higher at $72.08.

"This is the oil market's response to the OPEC+ group's 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 outside the group, Russia, on Sunday effectively rebuffed a demand from Trump for moves to cool the market.

"I do not influence prices," Saudi Energy Minister Khalid al-Falih told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost.

Trump said last week that OPEC "must get prices down now!", but Iranian Oil Minister Bijan Zanganeh said on Monday OPEC had not responded positively to Trump's demands.

"It is now increasingly evident, that in the face of producers reluctant to raise output, the market will be confronted with supply gaps in the next three-six months that it will need to resolve through higher oil prices," BNP Paribas oil strategist Harry Tchilinguirian told Reuters Global Oil Forum.

Commodity traders Trafigura and Mercuria said on Monday that Brent could rise to $90 per barrel by Christmas and pass $100 in early 2019, as markets tighten once U.S. sanctions against Iran are fully implemented from November.

JPMorgan said U.S. sanctions on Iran could lead to a loss of 1.5 million barrels per day, while Mercuria warned that as much as 2 million bpd could be knocked out of the market.

The Organization of the Petroleum Exporting Countries as well as top producer Russia has been discussing raising output to counter falling supply from Iran, although no decision has been made public yet.

A source familiar with OPEC discussions told Reuters on Friday that OPEC and other producers have been discussing the possibility of raising output by 500,000 bpd.

"We expect that those OPEC countries with available spare capacity, led by Saudi Arabia, will increase output but not completely offset the drop in Iranian barrels," said Edward Bell, commodity analyst at Emirates NBD bank.

U.S. commercial crude oil inventories are at their lowest since early 2015 and although U.S. oil production is near a record high of 11 million bpd, subdued U.S. drilling points toward a slowdown in output.

(Reporting by Christopher Johnson in LONDON and Henning Gloystein in SINGAPORE; Editing by Dale Hudson and Adrian Croft)

COMMENTS

More Related News

Iraq to host regional rivals Iran and Saudi Arabia at conference
Iraq to host regional rivals Iran and Saudi Arabia at conference

Iraq will host senior parliamentary officials from arch-rivals Saudi Arabia and Iran on Saturday as Prime Minister Adel Abdul Mahdi seeks to bolster his country's nascent role as a mediator in the region. Delegations including the heads of parliament from Turkey, Kuwait, Syria and Jordan will also attend the one-day conference in the Iraqi capital to discuss regional security, diplomacy and economic issues. Abdul Mahdi recently returned from visits to Iran and Saudi Arabia, both oil-super-powers that have long been vying for dominance in the Middle East.

Oil Steadies as Political Risks Mingle With Economic Worries
Oil Steadies as Political Risks Mingle With Economic Worries

West Texas Intermediate futures gained 12 cents, bringing their gain this week to 0.2 percent. Oil has climbed about 40 percent in New York this year as the Organization of Petroleum Exporting Countries and its allies cut supplies, which have been further squeezed by crises in OPEC members Venezuela and Iran, which are both subject to American sanctions.

Iraqi PM Abdul Mahdi met Saudi crown prince in Riyadh
Iraqi PM Abdul Mahdi met Saudi crown prince in Riyadh

Iraqi Prime Minister Adel Abdul Mahdi met with Saudi Arabia's Crown Prince Mohammed bin Salman, his office said on Thursday, a day after his first official visit to the kingdom which has been wooing Baghdad to stem the influence of Tehran. Abdul Mahdi's meeting with the crown prince came after he met King Salman on Wednesday.

Trump, Congress clash over Yemen war. What to know about America's role in the Mideast conflict
Trump, Congress clash over Yemen war. What to know about America's role in the Mideast conflict

Here's why Republicans and Democrats alike are increasingly willing to push back against President Donald Trump on his controversial Yemen policy.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.