OPEC+ set to ignore Trump and cut crude oil production
07 December, 2018, 07:54 | Author: Kathy Ellis
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The price of crude has fallen nearly a third since October but Trump has demanded OPEC make oil even cheaper by refraining from output cuts. Responding to a journalist's question during an interaction where he was asked about the reduced crude oil prices and on the United States President Donald Trump's tweet in which he had said that the world does not want to see higher fuel prices, the Saudi Oil Minister said that President Trump is the head of a country which is the largest consumer of oil, approximately about 20% of the global market, but the consumer in the USA is just like the consumer in France, India or Saudi Arabia who have every right to get affordable access to fuel.
Iran, OPEC's third-biggest producer, complained that it was the first time a U.S. president was trying to tell OPEC what to do.
Bob McNally, president of USA -based Rapidan Energy Group, said OPEC was stuck between a rock and a hard place given pressure from Trump on one hand and the need for higher revenues on the other.
OPEC heavyweight Saudi Arabia has indicated it is willing to cut production, despite U.S. President Donald Trump's pressure against a cut.
While the net balance shows the USA is selling more petroleum than buying, American refiners continue to buy millions of barrels each day of overseas crude and fuel. He said the OPEC countries were still discussing the distribution of the cuts between them. Some have raised concerns that Trump's decision to not sanction Saudi Arabia over the killing of a dissident journalist might sway the kingdom.
Iran's OPEC governor Hossein Kazempour Ardabili said on Tuesday that any meaningful cuts in production must be made by the countries which have pumped above their quotas in breach of a 2007 deal between OPEC and non-OPEC oil producers.
The agreement was reached during the Thursday talks between OPEC members in the Austrian capital of Vienna.
The cartel is struggling to convince markets that it can stabilize oil prices.
"The risk of OPEC+ not being able to agree on a deal was always very high and this will now pressurize prices significantly lower", said Amrita Sen, chief oil analysts at consultant Energy Aspects Ltd.
When asked if the Saudis had permission from Trump to cut production, Al-Falih replied: "I don't need permission from any foreign governments".
Experts say this week's meetings of the Organization of the Petroleum Exporting Countries will influence the price of oil over the coming months.
Brent oil futures fell as much as 5 percent to below $59 per barrel on fears that there could be no deal but later recovered somewhat, trading down 2 percent by 1325 GMT. How strongly it does so could depend on Russia's contribution, which will be determined in a meeting on Friday.
OPEC's reliance on non-members like Russian Federation highlights the cartel's waning influence in oil markets, which it had dominated for decades.
That would be a more bullish outcome than Al-Falih had hinted at early in the day, when he said a reduction of about 1 million barrels a day from the entire OPEC+ coalition should be adequate and "certainly we don't want to shock the market".
But with Russian Federation heading into winter, "climate conditions" made it "much more hard (to cut output) than for other countries", he said.
"The stakes are high now for OPEC".
Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years.
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OPEC is also riven by internal conflict, especially between regional rivals Saudi Arabia and Iran. Qatar Announces Withdrawal from OPEC group Effective January 2019. While it said it was purely a practical decision because it mainly produces natural gas and little oil, the move was viewed as a symbolic snub to the Saudi-dominated organization.
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