Published: Sat, July 07, 2018
Finance | By Claude Patterson

Iran sees oil price hitting $100 amid supply disruptions

Iran sees oil price hitting $100 amid supply disruptions

United Press International reports in its article Iran blames Trump for the spike in oil prices that U.S. President Donald Trump continues to put pressure on U.S. allies in the Organization of Petroleum Exporting Countries.

"REDUCE PRICING NOW!", Trump tweeted on Wednesday, accusing OPEC of "doing little to help" lower pump prices. It went down when USA shale producers started pumping more, taking advantage of the higher price.

In addition to cutting prices, Saudi Arabia told OPEC it pumped about 10.5 million barrels of crude a day last month as the kingdom sought to cap rallying prices by ramping up output, according to people familiar with the matter.

Because many OPEC countries are facing domestic troubles, the general expectation is that Iran, which is the fifth largest crude oil exporter, has a larger and increasingly discernible impact on how fuel prices behave in coming months.

An Iranian oil official said the US president should stop tweeting about oil because Mr. Trump is making the situation worse, according to Bloomberg News.

Ship brokerage Banchero Costa said Iran's crude oil production was now around 3.8 million barrels per day (bpd), but added "there is the risk of production decreasing going forward as exports are again affected by renewed sanctions implemented by the U.S.". The so-called "NOPEC Act" would make OPEC subject to antitrust law, allowing the go after OPEC for manipulating the oil market.

OPEC's production limits, which were implemented and extended multiple times to help bolster prices, have contributed to oil's rise.

On Tuesday, crude closed near 78 dollars per barrel, driven higher by a sharp drop in US inventories and the expectation of more drivers hitting the road for the July 4 holiday.

Antoine Halff, formerly a chief oil market analyst at the International Energy Agency and now senior fellow at Columbia University, said that Trump made three errors in his tweet: OPEC can influence market prices but is not a monopoly.

In a tweet on Saturday, Trump said Saudi Arabia had agreed to increase oil output by up to two million barrels, an assertion the White House rowed back on in a subsequent statement.

Investors had questions as "to whether Saudi Arabia and Russian Federation could or would really be able to ramp production quickly enough", said Rob Haworth, who helps oversee US$151 billion at U.S. Bank Wealth Management in Seattle.

By 5:00 pm GMT, U.S. West Texas Intermediate (WTI) oil futures had reached $74.90 a barrel and the global oil benchmark, Brent, $78.50/Bbl.

The Iranian president Rohani has clarified yesterday that Iran will not be silent in the face of that escalating against it threatening capping of the oil exports from the region.

Iran has threatened to block oil exports through a key Gulf waterway in retaliation against any hostile U.S. action.

U.S. crude stockpiles rose 1.3 million barrels last week, according to U.S. Energy Information Administration data.

USA crude stockpiles are forecast to have declined 5 million barrels last week, according to a Bloomberg survey ahead of government data to be released on Thursday. "The spare capacities in OPEC countries are just sufficient to offset this amount, but will not be enough if supply is additionally reduced by outages elsewhere - such as in Libya and Canada at present - and by falling oil production in Venezuela".

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