Iran tells Donald Trump to stop tweeting about oil prices

Andrew Cummings
July 5, 2018

Brent for September settlement advanced 46 cents to end the session at US$77.76 a barrel on the London-based ICE Futures Europe exchange.

Today's early price action is being driven by a late Wednesday tweet from President Trump, blaming OPEC for driving up fuel prices.

While Trump says he wants lower oil prices, USA sanctions against OPEC members Iran and Venezuela are adding uncertainty to the market, causing prices to spike. If anything, they are driving prices higher as the United States defends many of their members for very little $'s.

The president's call to "reduce pricing" was an apparent reference for oil producers to churn out more supply in order to contain spiking oil prices.

Oil prices edged up on Wednesday, lifted by a report of declining USA fuel inventories amid the ongoing crude supply outage at Syncrude Canada in Alberta, which usually supplies the United States.

A Reuters survey estimated us crude oil stockpiles fell for a fourth consecutive week, by about 3.3 million barrels, in the week ended June 29.

Earlier, she said in a note that the UAE and other Gulf states will benefit from the one million barrel hike announcement by Opec as they have the capacity to hike the output.

Distillate inventories saw a draw this week of 438,000 barrels, compared to an expected build of 633,000 barrels. Any time there's talk of increased production or even a suggestion, prices tend to go down.

In a tweet on Saturday, Trump said Saudi Arabia had agreed to increase oil output by up to 2 million barrels, an assertion that the White House rowed back on in a subsequent statement.

In addition to pressing Saudi Arabia to pump as much as 2mmb/d more to an unprecedented 12mmb/d, an amount many doubt the Saudi can maintain for an extended period of time - think Tesla making Model 3s - the Trump administration has also been pushing countries to cut all imports of Iranian oil from November when the U.S. re-imposes sanctions against Tehran, after Trump withdrew from a 2015 nuclear deal agreed between Iran and six major powers.

Apart from Iran, Venezuela, Libya and Angola are also facing chronic production issues.

Trading activity is expected to by limited on Wednesday due to the U.S. Independence Day holiday.

Prices could weaken over the short-term because technically, the markets may be overvalued.

The wildcard appears to be Russian Federation. Trump also has the option to open up the strategic supply spigot, but that will only be a short-term fix.

Iran has threatened to block oil exports through a key Gulf waterway in retaliation against any hostile USA action. The report will be released at 1500 GMT rather than the customary 1430 GMT.

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