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Oil markets volatile as trade conflict between US and China escalates

09 July, 2018, 06:46 | Author: Sara Gill
  • Outage in Alberta's oilsands is pushing U.S. crude to a four-year high

US President Donald Trump has tried to calm jittery oil markets by suggesting Saudi Arabia is willing to use up to 2 million barrels per day in spare capacity to meet any supply shortages arising from US sanctions on Iran, writes Nassir Shirkhani.

United States (U.S.) President Donald Trump reiterated his call for the Organisation of the Petroleum Exporting Countries (OPEC) that exerts significant influence over oil prices to take action to halt crude's upward climb.

Trump has criticized the "OPEC Monopoly" in recent days for not doing enough to reduce oil and gas prices. The president said the US defends many OPEC member states, insinuating that as a returned favor, these nations should cave to Washington's demands. This must be a two way street. Weekend discussions with Saudi Arabia, the de facto leader of OPEC, led to pledges from Riyadh to ensure the market was stable given lingering concerns about supply deficits. The bank said that USA efforts to block Iran from exporting oil would make it hard for OPEC to meet supply demands, forcing prices to rise.

In a letter to United Arab Emirates Energy Minister and OPEC President Suhail Mohamed al-Mazrouei, Iran's Oil Minister Bijan Zanganeh said: "OPEC decisions by no means warrant any action by some of its member countries in pursuit of the call for production increase by USA, politically motivated against Iran".

OPEC members agreed June 23 to increase crude oil output by pumping 1 million barrels more daily, but it is still unclear how much of the oil produced would ease off prices in a period-the northern hemisphere's summer-generally associated with high oil demand.

Iranian President Hassan Rouhani appeared on Tuesday to threaten to disrupt oil shipments from neighboring states if Washington continued to press all countries to stop buying Iranian oil. Off-topic, inappropriate or insulting comments will be removed.

He said: "Supply side disruptions that are bullish for oil, and demand side forces including the threat of trade protectionism that threaten the global economy and would thus be bearish for oil prices and most other commodities".


However, the rise was much smaller than the 9.89 million drop recorded the previous week and while crude prices fell on the news they soon moved off the day's lows. "Pls stop it, otherwise it will go even higher!"

Trump's administration has been a firm supporter of Saudi Arabia, signing a $110 billion defense deal during his first full year in office.

A US government report also weighed on prices this week, showing crude stockpiles rose by 1.3 million barrels, while analysts had forecast a decline.

Brent, the global benchmark for the price of oil, was trading near $78 per barrel on Thursday.

"Your tweets have driven the prices up by at least $10 per barrel", OPEC Governor Hossein Kazempour Ardebili said, according to the Iranian Oil Ministry's Shana news service.

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

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