Published: Wed, June 13, 2018
Economy | By Shawn Conner

Donald Trump reignites Opec spat over 'too high' oil prices

Donald Trump reignites Opec spat over 'too high' oil prices

"Oil prices are too high, OPEC is at it again".

The world's top crude producers are key partners in the OPEC+ deal, which is created to prop up oil prices by cutting global output.

"The prospect of easing supply curbs from OPEC-led producers continues to be reflected in oil's overall depressed price", said Lukman Otunuga, analyst at futures brokerage FXTM. Oil output for Venezuela has been crimped by the nation's economic crisis while US sanctions on Iran could further reduce that country's output.

A man fixes a sign with OPEC's logo next to its headquarters' entrance before a meeting of OPEC oil ministers in Vienna, Austria, November 29, 2017.

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"The Trump administration is trying to intervene in the affairs of a sovereign organization", Iran's OPEC governor, Hossein Kazempour Ardebili, said in an interview. Oil prices are artificially Very High!

Russian Federation plans to propose to the OPEC/NOPEC allies next week that they reverse the group's production to the October 2016 levels-the baseline for the cuts of most pact participants when they had pumped as much oil as they could to blunt the cuts' impact later.

OPEC and various non-OPEC oil producers are set to convene in Vienna later in the month to discuss future production. The calculus changed, however, after Trump announced in May that the United States was pulling out of the 2015 deal that restricted Iran's nuclear program in exchange for the removal of sanctions.

"We have looked at a scenario, not a forecast, showing that by the end of next year output from these two countries (Venezuela and Iran) could be 1.5 mb/d (million barrels per day) lower than it is today", it said in a report.

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"The United States shows by far the biggest gain (about 75 percent of the total across 2018 and 2019), but recently this expansion has not been without stress", the report said, referring to a gap in recent weeks between the USA and European oil futures contracts.

The U.S.is putting pressure on OPEC members to increase production as global benchmark prices flirt with US$80 a barrel, raising pump prices in the months before the U.S. votes in midterm elections that could decide which party controls Congress.

To make up for the losses, the IEA estimated that Middle East Opec countries could increase production in fairly short order by about 1.1 million bpd.

Oil prices across the country have crept up toward $3 a gallon as the USA hits its peak summer travel season - still less than the $4 a gallon in 2008 during the 2007-2009 Great Recession, according to Reuters.

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