It appears that Saudi Arabia is saying "enough is enough" when it comes to the correction in crude oil and wants to set the record straight, just one day after an unscheduled Joint Ministerial Monitoring Committee with all the OPEC and Non-OPEC conspirators, Saudi Arabia wanted the market to know that they were not flooding the market with oil.
Hail to the tweet! President Donald Trump is calling out OPEC and telling them now is the time to lower prices. The tweet this time had less of an oil price impact from previous tweets, as many are starting to realize OPEC can’t do much. The President tweeted that “The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two-way street. REDUCE PRICING NOW!”
So, President Trump is using his leverage with the Saudis saying you must replace Iranian oil because we have got your back against your nemesis. The Saudis, of course, must look like any move they make is within the boundaries OPEC and Russia has set. Iran Oil Minister Bijan Namdar Zanganeh said any production increase above limits agreed to by OPEC would “breach” the deal, according to a letter he sent to OPEC President Suhail Al Mazrouei and distributed by the Iran Oil Ministry’s news service Shana. OPEC should reject the U.S. call for a production increase which is “politically motivated against Iran,” he said, as reported by Bloomberg.
With the Trump Administration working toward zero Iranian exports by November, Libyan oil supplies at risk due to clashes with militias, and crashing supply from Venezuela, reports of tightening U.S. supply is keeping oil on edge. Crude oil price continued its drive, hitting $74 a barrel for the first time since that fateful OPEC meeting in November 2014.
All is well in OPEC land. OPEC kept it together with a unanimous deal, even though there is still disagreement on what the deal in Vienna means. Post OPEC, we have a rising dollar on China/U.S. trade tensions and a major Canadian oil sands outage that will buoy U.S. prices.
The historic OPEC NON-OPEC production agreement became known as OPEC plus one. Russia became that plus one as they joined OPEC and conspired with them to reduce production and ultimately raise production and reduce supply. As OPEC meets today it is OPEC minus one. Iran seems to be the lone holdout from a production deal that’s on paper.
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.