Oil prices mixed as Donald Trump calls on OPEC to lower prices

Mae Love
September 22, 2018

US President Donald Trump on Thursday once again tweeted his belief that major oil producers in the Middle East were conspiring to keep oil prices high, and he seemed to threaten the withdrawal of military resources from the region if the OPEC cartel did not help to lower prices.

The president also suggested it was unfair that OPEC raises prices when, "We protect the countries of the Middle East, they would not be safe for very long without us".

Oil prices on Wednesday pulled back from gains racked up the previous day, pushed down amid a surprise climb in USA crude stockpiles.

Trump seemed to threaten the withdrawal of USA military resources from the Middle East if OPEC members in the region didn't work to lower prices.

Incumbents who face challengers in the upcoming USA mid-term elections have reasons to want oil prices - and in turn, gasoline prices at the pump - to be lower this fall, too.

His complaint follows signals from Saudi Arabia that it was content to see prices climb above $80 a barrel.

Trump's tweet makes sense "with oil prices close to the highs of the year", said Giovanni Staunovo, commodity analyst at UBS Group AG.

High petrol prices can be an issue for voters, and Trump's attacks come just a couple of months ahead of the USA midterms, where analysts say rising prices could hurt Republicans.

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The new sanctions take effect in November, as a result of with Trump's decision to pull out of a 2015 agreement on Iran's nuclear program.

"It's also political because the Saudis don't want to pump too much oil then the Iranians complain to OPEC that [Saudi Arabia] is taking [Iran's] market share".

Elsewhere, the latest escalation in the tit-for-tat trade war between the United States and China stoked worries over global economic growth and demand for oil.

Trump's fresh intervention in the oil market comes before a meeting of ministers from the Organization of Petroleum Exporting Countries and its allies in Algeria on Sunday, Bloomberg reported.

Investors grappled with the Organization of the Petroleum Exporting Countries and non-OPEC producers' ability to offset a shortfall from Iran due to US sanctions that go into full force November 4.

Brent crude oil LCOc1 was up 13 cents at $78.83 a barrel by 11:27 a.m. EDT (1527 GMT) after earlier touching a session high of $80.12.

But that has raised some doubt over whether Riyadh can quickly boost output to what the kingdom says is its maximum sustainable capacity of 12 million bpd, the sources said.

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