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Why Oil Prices Are Surging

01 July 2018

Venezuela's production has fallen to 1.4 million barrels a day, about a million barrels a day less than it produced two years ago. In reality, the output increase isn't expected to exceed 700,000 barrels per day because some members are already pumping at maximum capacity.

The Saudi Press Agency said Trump had called Salman and the two highlighted "the necessity of doing efforts in order to preserve the stability of the oil market and the global economy growth".

If Trump's comments are accurate, oil analyst Phil Flynn said it could immediately knock $2 USA or $3 off a barrel of oil.

Iran opposed any changes to the original production-cut deal at a time when its oil industry is facing renewed sanctions over Trump's decision to quit the worldwide nuclear deal with Tehran.

Oil prices rose sharply in the spring as production collapsed in crisis-ridden Venezuela and traders anticipated Trump's withdrawal of the United States from the Iran nuclear deal.

Global oil prices, which ranged from between 40 dollars to 50 dollars a barrel in 2016, increased to about 50 to 60 dollars in 2017, and continued upward to 80 dollars in 2018.

Saudi Arabia, the world's top oil producer, could pump as much as 11 million barrels of oil per day in July, according to Reuters.

Iran had been pushing hard for oil producers to hold output steady as USA sanctions are expected to hit its exports.

The president had again blamed OPEC for high global oil prices on June 13.

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In a tweet, Trump said Saudi Arabia would, at his request, increase production "maybe up to 2,000,000 barrels".

Non-OPEC Russia, meanwhile, was under pressure from its own energy companies to lift caps on output and fight a steep rise in domestic fuel prices that was hurting President Vladimir Putin's popularity, Russian sources have said.

Saudi Arabia, backed by non-member Russian Federation, had argued strongly in favor of increasing production as grumbles in major consumer countries like the United States, India and China have grown about higher prices.

"President Trump's reckless decision to pull out of the Iran deal has led to higher oil prices", Senate Minority Leader Charles Schumer, D-N.Y., said last month during a photo op outside an Exxon station. Prices have also increased due to the persisting US-backed troubles in Venezuela, as well as with the unrest in Libya over control of that country's oil infrastructure. That was after Saudi Energy Minister Khalid al-Falih said the kingdom would honour the OPEC decision to stick to a one-million-barrel increase.

USA officials are pressing allies in Europe, Asia and the Middle East to adhere to the sanctions once they are re-imposed, with the aim of pressuring Iran into negotiating a new agreement.

Oil prices rose last week, partly due to U.S. plans to reimpose sanctions on Iran, a major oil producer.

"They bring to bear economic pressure to separate the nation from the system. but six United States presidents before him tried this and had to give up", Khamenei was quoted as saying on Saturday by his website, referring to Trump.

That's up about 55 cents from the same period past year, at a time Mr Trump's Republican Party is trying to hold on to its majorities in Congress in the November midterm elections.

"The market will go up to $100 I am sure as Saudi Arabia said they will plan an increase for July. This was managed between the two to rob the pocket of rest of the world", he said.