Americas News
Trump Wants Sub $80/bbl Oil as Result of Sunday OPEC Meeting: Kemp
Whether or not the Organization of the Petroleum Exporting Countries (OPEC) and non-members agree to boost crude output by 500,000 barrels per day (bpd) as an anonymous source told media might happen when the group meets in Algeria this Sunday, the meeting is bound to displease a certain individual who resides in the White House and is fond of ranting on Twitter.
A source familiar with the discussions told Reuters on Friday that OPEC and its allies are currently debating the output increase - which would lower compliance of the cartel's current output cut agreement to less than 100 percent - in order to counter falling supply from Iran due to the U.S. sanctions against the Islamic republic.
The source said, "There are discussions to increase production by another 500,000 bpd; they [OPEC and non-OPEC] can increase output when they meet in December" - a reference to the next formal OPEC meeting, scheduled for December 3.
At face value, the increase, if indeed it's being discussed, would seem to be logical considering the latest data shows that OPEC and its allies supplied less oil in August globally than they did in July, due to a drop in Iranian exports - and the group has repeatedly vowed to avoid a market tightening and accompanying price spikes.
But several analysts also pointed out that the anonymous source stepped forward after U.S. president Donald Trump on Thursday tweeted his displeasure over high oil prices and demanded that OPEC do something about it when it convenes in Algeria.
Some analysts, including John Kilduff, founding partner at Again Capital, have pointed out that 500,000 bpd will hardly do anything to affect prices, meaning that whether or not OPEC decides to boost output on Sunday or remain as is, Trump will likely soon be ranting on Twitter once again.
John Kemp, energy and commodities analyst for Reuters, noted that the Trump administration is trying to maintain its footing on a "narrow and difficult path" with imposing tough sanctions on Iran's oil exports on one hand but not sending prices sharply higher on the other.
He also pointed out that the brash billionaire's tweets make it "possible to infer that he doesn't want prices to rise above $80 per barrel and would prefer them closer to $70 or even below.
"The president's tweets are creating an implicit price target, even if officials have been careful not to specify an explicit one."
The tweet in question consisted of Trump remarking, "We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember; the OPEC monopoly must get prices down now!"
