Oil prices fall after Trump demands OPEC 'reduce pricing now'

Iran’s President Hassan Rouhani is seen at the airport in Tehran

Iran’s President Hassan Rouhani is seen at the airport in Tehran

At their meeting in Vienna last month, OPEC countries and key ally Russian Federation said they will raise production by a million barrels per day, but analysts are concerned it may not be enough for oil prices to spiral out of control, at least until new USA shale production comes on stream.

"Saudi Arabia's readiness to utilize its spare production capacity which is estimated at 2 million barrels could spell trouble for oil bulls down the road", Lukman Otunuga, research analyst at FXTM, told Arab News.

Kazempour Ardebili said Trump was trying to intensify tensions between Iran and Saudi Arabia and he called on the United States to join world powers in a meeting with Iran in Vienna on Friday.

The leader of Saudi Arabia promised US President Donald Trump that he can raise oil production if needed and the country has 2 million barrels per day of spare capacity, the White House said on Saturday.

OPEC together with a group of non-OPEC producers led by Russian Federation started to withhold output in 2017 to prop up prices.

"The reasons why crude is reasonably strong at the moment is there is very good demand growth out there and over the last year-and-a-half there has been compliance with the reduced production by Opec and non-Opec members that has cut 1.8m barrels a day from the supply side of the equation", he said.

Hook declined to say if the kingdom can offer that additional supply, but the United States is "working to minimize disruptions to the global market", Hook said.

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Another development that could disrupt Texas oil prices is Mexico's recent election.

Firstly, President Trump has shown with North Korea that his type of pressure campaign amid diplomatic efforts have worked or at least so far working, hence it is in the interest of Saudi Arabia to keep a check on Iran by going it Trump's way.

In May, the US retreated from a multilateral deal with Iran regarding its nuclear disarmament program, and imposed sanctions to limit the world's fourth largest oil exporter's access to global markets. Despite that key member Saudi Arabia is affirming that the group and its allies will boost output, Goldman Sachs Group Inc. warned that oil is likely to lead a new rally as the market faces significant supply risks from Venezuela to Iran.

The president also had tough words for other USA allies. The state-managed model of Saudi Arabia and its compatriots no longer has the same lock on the global oil supply that it used to. Iran Oil Minister Bijan Namdar Zanganeh said any production increase above limits agreed to by OPEC would "breach" the deal, according to a letter he sent to OPEC President Suhail Al Mazrouei.

"As Libyan port closures remove about three-quarters of their 1 million barrel-per-day exports, crude is pushing higher again today", he said.

Abu Dhabi said it's ready to increase oil output in line with guidance set by OPEC and allied producers.

"In this battle", he said, "any country that tries to take Iran's place on the oil market will be guilty of treason against Iran. and surely one day it will pay the price of this treason".

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