Oil Prices Head Higher On Huge Crude Draw

Andrew Cummings
July 5, 2018

The announcement comes after US President Donald Trump said on Saturday that King Salman had agreed to his request to ramp up oil production.

Outside North America, looming US sanctions against major oil exporter Iran were the focus of attention.

WITH Saudi Arabia expressing its ability to raise oil production by two million barrels in obedience to pressures from US President Donald Trump, there are fears that Federal Government's 2018 budget just recently signed by President Muhammadu Buhari may be in trouble.

"Your tweets have driven the prices up by at least $10 per barrel", Iran's OPEC governor Hossein Kazempour Ardebili said the message, Bloomberg reported, citing the Iranian Oil Ministry's Shana news service. "He has agreed", Trump tweeted on June 30. Asked if someone was manipulating oil markets, Trump said: "OPEC is and they better stop it because we're protecting those countries, many of those countries".

"With the oversupply fears still lingering in the background, rising production from OPEC+1 and USA shale, plus trade war fears, could negatively impact oil prices". Adnoc, as the company is known, can pump as much as 3.3 million barrels of crude a day and will increase output capacity to 3.5 million barrels daily by the end of the year. Analysts warn of increased tightness ahead, and some are once again suggesting that triple-digit oil prices are a realistic possibility.

Oil held near three-year highs on US Independence Day as tight supplies at home and overseas overshadow a Saudi pledge to boost output.

The escalating trade row between Washington and Beijing, which triggered another sell-off in Asian stocks on Thursday, was also felt in oil markets, with China warning it could introduce duties on US crude imports at an as yet unspecified date.

The president also had tough words for other U.S. allies.

"The 'OPEC+' agreement fell short of what was expected to render a bearish signal to the market", Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London, said in an email.

On the other hand, the International Monetary Fund (IMF) praised the positive economic reforms that Saudi Arabia has been working on while stressing that the implementation of some initiatives aimed at increasing non-oil revenues is a significant achievement.

"Saudi Arabia obviously can deliver as much as the market would need, but we're going to be respectful of the 1-million-barrel cap - and at the same time be respectful of allocating some of that to countries that deliver it", al-Falih said then.

"Opec and non-Opec countries participating in the Declaration of Cooperation remain unwavering in their commitment to contribute to market stability, in the interests of producers, consumers and the global economy", Mazrouei said in a statement.

Meanwhile, China's commerce ministry said on Thursday the United States is "opening fire on the entire world", warning that Washington's proposed tariffs on Chinese goods will hit global supply chains.

Foreign ministers from the five remaining signatories of a nuclear deal between Tehran and world powers will meet Iranian officials in the Austrian capital to discuss how to keep the accord alive after the US withdrawal from the pact.

China's customs agency said on its website that Chinese tariffs on USA goods would immediately be implemented in retaliation.

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