OPEC Wont Take Additional Action As Oil Prices Rise

  • OPEC Wont Take Additional Action As Oil Prices Rise

OPEC Wont Take Additional Action As Oil Prices Rise

"Saudi Arabia, and OPEC more broadly, would lose its key lever on the global oil market, which would leave prices heavily exposed in the case of an additional supply shock", the analysts added.

On Wednesday, Trump said in a tweet the "OPEC Monopoly must remember that gas prices are up and they are doing little to help". This statement comes in the wake of fresh sanctions on Iran after US President Donald Trump chose to pull out of the nuclear deal with Iran.

Oil prices rebounded strongly following the message from the U.S. Department of State.

"There was pressure from the South Korean government to halt purchases", said the source familiar with Iranian shipping arrangements.

Iran, OPEC's third-largest producer, is facing U.S. sanctions on its oil exports that are prompting some buyers to cut purchases.

"If the USA government were to relax regulations on offshore oil resources and expedite having companies develop oil resources that are on federal land, then the US would not almost be as dependent on OPEC as it now is", says Robert Murphy, an economist at the Institute for Energy Research.

After pulling out of the Iran Nuclear Deal, the U.S. has asked India to stop importing oil from Iran.

Based on that assumption, they added, zero Iran exports could push oil up by $US50 a barrel if Saudi Arabia caps out.

Iran on Saturday accused US President Donald Trump of destabilising the oil market, saying he gives OPEC members orders that are "very insulting". U.S. crude futures added 29 cents, or 0.4 percent, to $74.09. For the week, Brent fell 0.5 percent, while United States crude slipped 0.3 percent. The US rig count, an early indicator of future output, was up by five in the week to July 6, according to General Electric Co's Baker Hughes energy services firm.

Oil prices rose on Tuesday on escalating concerns over potential supply shortages, with Brent crude leading the way as hundreds of oil workers in Norway were set to strike later in the day.

But assuming sanctions apply only to crude, the global market would still need to replace more than 2 million barrels per day (bpd) of Iranian exports from the start of November. So far this year, USA oil futures have averaged $65.71 per barrel.

US Energy Information Administration (EIA) last month projected average annual US production will rise to a record high 10.8 million barrels per day (bpd) in 2018 and 11.8 million bpd in 2019 from 9.4 million bpd in 2017.