More Crude Gains as Trump Continues OPEC Attacks

One industry expert thinks high oil prices are necessary. File Image / Pixabay

Unsurprisingly after crude's remarkable price gains on Monday due to the Organization of the Petroleum Exporting Countries (OPEC) deciding not to increase output, U.S. president Donald Trump renewed his demand that the cartel open its taps - and the result was that prices inched yet higher on Tuesday.

Brent rose 70 cents to $81.90 per barrel, while West Texas Intermediate escalated 16 cents to $72.24 per barrel.

Trump on Tuesday also voiced his displeasure about OPEC to the United Nations General Assembly, stating, "OPEC and OPEC nations are as usual ripping off the rest of the world, and I don't like it - nobody should like it."

He added, "We defend many of these nations for nothing, and then they take advantage of us by giving us high oil prices - not good."

The media was quick to point out that the Trump administration has pushed prices higher this summer by telling oil buyers they must cut their purchases of Iranian crude to zero by November 4 or else face U.S. sanctions.

Pundits were also on hand to defend OPEC: Helima Croft, global head of commodity strategy at RBC Capital Markets, said, "OPEC has actually been a pretty good first responder: they have put a significant number of barrels on the market since President Trump started tweeting and since the June [OPEC] meeting."

Predictably, European countries that opposed Trump's get-tough stance on Iran were quick to argue that if he had not reimposed sanctions, prices would not have risen as much.

This was the message delivered on Tuesday by Emmanuel Macron, president of France, who told the United Nations, "If he goes to the end of his logic, he'll see that it's good for the oil price that Iran can sell it; it's good for peace and global oil prices.

"Otherwise there is an impasse in the rationale for which I don't have the answer: it's an economic reality ... supply and demand."

Meanwhile, a provocative argument in favour of high prices was supplied by Ben van Beurden, CEO for Royal Dutch Shell, who told CNBC that $80 oil is not "unreasonable" and may be necessary to encourage spending on oil and gas infrastructure after a period of under investment.

Still, some analysts think Trump's persistent hectoring will pay off: John Kilduff, founding partner at Again Capital, said, "It's hard to believe that [Saudi Arabia] won't answer the call at some point, especially if prices tick much higher; he's going to be unrelenting in pressuring them."

Earlier this week, Khalid al-Falih, energy minister for the Saudis, expressed the opinion held by other OPEC members that global oil markets are "very well balanced" and "we expect a supply surplus in 2019, maybe we will have to return to a cut."