U.S. President Donald Trump criticized OPEC on Friday for output curbs that have helped raise global oil prices and said “artificially” high prices would not be accepted, drawing rebukes from oil-producing countries as prices dipped following his remarks.
Several members of OPEC, the Organization of the Petroleum Exporting Countries, said in response that oil prices were not being artificially inflated. The group is slated to meet in June to decide its next steps after reducing output since January 2017 in a move aimed at supporting prices that had fallen sharply.
Trump gave no details on what action his administration might take regarding oil or OPEC, and representatives for the White House did not immediately respond to a request for comment.
Oil prices fell after Trump’s remarks but were still set for a weekly gain.
Brent crude oil futures and U.S. West Texas Intermediate (WTI) crude futures hit their highest levels since November 2014 earlier this week, at US$74.75 and $69.56 per barrel respectively, buoyed by a tightening market and higher demand.
Following Trump’s tweet, Brent futures were at US$73.25 per barrel at 1300 GMT, down 53 cents from their last close. WTI futures were down 45 cents at $67.84 a barrel.
OPEC Secretary General Mohammed Barkindo said the pact between OPEC and non-OPEC countries to cut production had halted the collapse in global oil prices, and said the group was a friend of the United States with an interest in its prosperity.
Output cuts “not only arrested the decline but rescued the oil industry from imminent collapse and is now on course to restore stability on a sustainable basis in the interest of producers, consumers and the global economy,” Barkindo said.
Energy ministers from the United Arab Emirates and Iraq, two OPEC members, also rejected the notion that prices were too high.
The United States cannot legally influence oil other than through releasing oil from its strategic reserves which it has done occasionally, most recently last year in the wake of Tropical Storm Harvey.
Beyond OPEC’s supply management, crude prices have also been supported by an expectation that the United States will re-introduce sanctions on OPEC-member Iran.
“The first key geopolitical issue is the expiration of the current U.S. waiver of key sanctions against Iran,” said Standard Chartered Bank in a note this week.
Top oil exporter Saudi Arabia would be happy to see crude rise to US$80 or even US$100 a barrel, three industry sources have told Reuters, a sign Riyadh will seek no changes to the OPEC supply-cutting deal even though the agreement’s original target is within sight.
© Thomson Reuters 2018
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