Iran Blasts Trump for Causing High Oil Prices Ahead of OPEC Summit

by Ship & Bunker News Team
Tuesday June 19, 2018

In what is becoming an increasingly familiar complaint from the Islamic republic, Bijan Zanganeh, oil minister for Iran, told media on Tuesday that "The current problem in the oil market is the result of political tension caused by the American president, not supply and demand imbalance."

He also stated that he does not expect the Organization of the Petroleum Exporting Countries (OPEC) to reach an agreement about whether or not to relax the crude output restrictions when the cartel holds policy discussions beginning on Friday in Vienna.

If that weren't enough, Zanganeh - who was departing Iran for the Vienna summit - blamed U.S. president Donald Trump for instigating policies that have caused high oil prices - even though Trump's single-minded aim to gain global energy supremacy have if anything kept a cap on prices, while OPEC's cutbacks have been widely credited in boosting the fortunes of both West Texas Intermediate and Brent.

He remarked, "We believe Mr. Trump prefers high oil prices to support shale production in America, but he attacks OPEC, especially after U.S. withdrawal from the [Iran nuclear deal], to avoid public pressures for increasing the prices of oil."

While the outburst against the brash billionaire may be viewed as petulant given that Iran is still smarting over the loss of a deal that conservative groups claim was fatally flawed and heavily skewed in favour of Iran, Zanganeh's remark about politics influencing the oil market is downright ironic, considering the OPEC summit is rapidly shaping up to be a battle royale against members such as Saudi Arabia  who want to pump full out, members with ailing economies such as Venezuela's who do not, and members such as Iran who are against any output increases because they think Trump has persuaded the Saudis to act accordingly. 

All this, of course, will presumably add to market volatility over the next few days, and this was not lost on CNBC television host Jackie DeAngelis, who pointed out that the oil market "is a little tentative" as the Friday OPEC meeting approaches, helped along by uncertainty over whether an increase in output resulting from the meeting would translate into 250,000 barrels per day (bpd) or as much as 1.5 million bpd.

She added with regards to issues such as the escalating tension between the U.S. and China, U.S. inventories drawing down, and output restrictions in Venezuela and Iran, "There's a push and pull on the market right now, you can certainly see that reflected in pricing."

If OPEC does indeed decide to increase output on Friday and predictions made by Barclays come true, then high prices will soon no longer be a part of any debate: earlier this week the bank noted that even a moderate 700,000 to 800,000 barrel per day boost will put Brent at an average next year of $65, about $10 less than current prices.