How Trump is about to send world oil prices soaring even higher

How Trump is about to send world oil prices soaring even higher

Andrew Cummings
July 20, 2018

Oil prices fell on Thursday after official data showed an unexpected rise in U.S. crude stockpiles, United States output hit a record high and major oil exporters increased production.

Since the embargo, OPEC has continued using its influence to manage oil prices.

The US had asked all other nations to cease the import of oil from Japan by November. The US has threatened to sanction "everybody, including China" if they purchase Iranian oil once sanctions step into effect.

"EIA's latest Short-Term Energy Outlook (STEO) from July expects total USA crude oil production to average 10.8 million bpd this year, up by 1.4 million bpd from last year". Saudi Arabia had moved on Thursday to allay fears of oversupply, which had supported prices. China, one of its biggest customers imported nearly 27 percent of total Iranian exports, followed by India with 16 percent, South Korea with 10 percent, Japan with 7 percent and Turkey with 10 percent.

OPEC contributes one-third of global oil, adds or removes supplies in the market, which ultimately affect oil prices. USA crude prices had reached a session high of $70.17 earlier in the trading day. According to Bloomberg, that leaves Iran with few options other than convincing China, its biggest customer, to buy more Iranian oil. In May of this year, U.S. President Donald Trump jettisoned U.S. commitments to the 2015 nuclear deal with Iran. United States oil production continues to break records, topping 10.9 mb/d in the last few weeks, an all-time high.

Thanks to that record refinery throughput, USA crude inventories remained steady and accumulated refinery product stocks "more than offset" the drawdown in crude oil inventories.

Oil markets have fallen over the last week as Saudi Arabia and other members of the OPEC and Russian Federation increased production and as some supply disruptions eased.

"That's the takeaway from Wood Mackenzie's latest long-term outlook for global oil supply", reports, an industry site. In June, Saudi Arabia pumped 10.49 million bpd (its OPEC limit is 10.06 million bpd).

They also gained about 1 percent on Wednesday. India, vulnerable to USA pressure, has said that it would only buy Iranian oil if it is able to get a waiver against sanctions from the US government. Gasoline inventories have swelled amid high runs and tepid demand growth, which will hurt the margin for further processing of gasoline.

Meantime, Russia is getting ready to invest US$50 billion in Iran's oil and gas industry as the two countries continue to seek closer ties.

With the record refinery throughput, USA petroleum inventories held steady as an accumulation of refined product stocks more than offset the drawdown in crude oil stocks.

"Markets are now nervous, not only about a trade war, but also a currency war".

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