OPEC speculation and a strong dollar on trade war fears is providing highs and lows on the crude oil market. Oil was rallying on a big 5.9 million barrels draw in inventory, and a record-breaking week for U.S. refiners as they ran a seasonal record 17.7 million barrels a day crude oil last week according to Energy Information Administration data.
It looks like it is going to be a showdown at the OPEC coral as Iran leads the coalition of the not so willing to raise oil production along with Iraq and Venezuela. The coalition of the willing lead by Saudi Arabia and the so-called Plus 1, Non-OPEC Russia seems as committed as ever to raising oil output. Russian Energy Minister Alexander Novak Is pushing for a 1.5-million-barrel increase in output, which is partly a negotiating tactic and partly a concern that the market might become undersupplied in the third quarter.
The anticipation of a drastic shift in OPEC’s mindset is quite puzzling to most when you consider that the previous theme heading into meetings was how much production output could possibly be cut from the market. This focus has suddenly been replaced with anxiety over how much supply could potentially be added back into the market.
Trade war fears are escalating after President Donald Trump hit back against the Chinese by asking his administration to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10%. This came after markets started to shake off concerns about the United States imposing a 25% tariff on up to $50 billion of Chinese products.
Crude oil prices got hit hard as the trade war for oil traders got personal. In a tit for tat, the Chinese government announced tariffs on U.S. oil imports as well as other energy products, in a sector that U.S. President Donald Trump promised to make great again. This along with the fact that most people believe that OPEC and Russia will decide to increase oil output even after reports that Bloomberg says that Iran, Iraq and Venezuela will veto the increase.
As Russia smoked Saudi Arabia in the World Cup, crude oil ministers from those two countries signaled that indeed OPEC and Non-OPEC countries will be raising oil output. Saudi Arabia’s oil minister said it is “inevitable” that OPEC and Russian production will rise by what he says is a "reasonable and moderate" amount. T