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Trump Says OPEC To Blame For High Oil Prices

22 June 2018

Iran will not accept Saudi Arabia's proposal to increase crude output of Organization of the Petroleum Exporting Countries (OPEC), Iran's representative to the OPEC was quoted as saying Tuesday.

According to Jain, for the oil markets, the Opec meeting is crucial, as its planned 1.8 million barrels per day (mb/d) output cut went a long way in boosting crude oil prices. Iran faces renewed USA sanctions that will impact its oil industry and Iraq has production constraints.

The news of the U.S. asking OPEC to increase oil output by 1mb/d (million barrel per day) in the second half of 2018 and rising USA oil production has put downward pressure on prices.

If Russia also increases its production, that would be a breach of the cooperation agreement, Ardebili said.

Increased production of USA shale oil took some sheen away from the anticipated impact of the output cuts.

BCC blamed the downgrade on the uncertainties around Brexit, interest rate hikes, trade war risks and rising oil prices.

China retaliated by imposing import duties on USA products, and suggesting that crude oil tariffs were planned.

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"There is an element of self-preservation in seeking to do this, as while most oil producers prefer higher prices they will also want to avoid a scenario where prices reach a level where demand drops off sharply, thus triggering a global slowdown, as well as accelerating the push for renewable (energy)", he said.

Last week, Cushing inventories fell by 1.3 million barrels, government data showed on Wednesday.

Energy firms were among the biggest losers as oil prices plunged ahead of a key OPEC meeting, where Saudi Arabia and Russian Federation are expected to lift a two-year-old production cap.

The increase of 300,000 to 600,000 barrels a day - above the current OPEC+ production of about 32 million barrels a day - is a less theoretical number.

Elsewhere, Venezuela, which faces the threat of U.S. sanctions and is in the midst of an economic crisis, is almost a month behind delivering crude to customers from its main oil export terminals, and chronic delays and production declines could breach state-run PDVSA's supply contracts if backlogs are not cleared soon.

The energy sector was the S&P 500's second most positive boost with a 1.1 percent increase as crude oil futures reversed earlier losses to settle higher. Russia, by far the largest non-member to join OPEC's cuts agreement, has said it would be happy with lower crude prices and appears keen to start up new fields.

OPEC is discussing a relatively modest production increase before its meeting in Vienna this week. Iran on the other hand can lose 500,000 to 1 million barrels / day supply because of us sanctions. Both countries have spare production capacity and raising output even at lower prices would yield significant returns. China imports about 365,000 barrels a day of U.S. crude. China said it would impose tarrifs on a variety of USA goods, including crude and gasoline, in response to President Donald Trump's $50 billion levy on Chinese imports.

Trump Says OPEC To Blame For High Oil Prices