OPEC Members Insist Market Supply is Healthy, Take Jabs at Trump

by Ship & Bunker News Team
Monday September 24, 2018

Finger pointing and Trump-bashing came in the wake of the Organization of the Petroleum Exporting Countries (OPEC) deciding over the weekend to risk the wrath of volatile U.S. president Donald Trump and not boost crude output, contrary to what many analysts and inside sources expected would happen.

However, while much was made of the cartel's decision being a rejection of Trump insisting that output should increase in order to lower prices, it seemed instead to be in line with the perception that - again, contrary to fears of a tightening market due to production shortfalls in Iran and Venezuela - that all is fine with the global market.

Indeed, Khalid al Falih, energy minister for Saudi Arabia, stated, "I think member countries over the last three months since June have responded in a very good way and have opened the taps and provided a lot of supply to offset decreases in Iran, decreases in Venezuela, decreases in Mexico, and markets are quite balanced today.

"There is plenty of supply to meet any customer that needs it."

He added, "I don't know of any refiner in the world who is looking for oil that hasn't been able to get it, and I can tell you that Saudi Arabia and Saudi Aramco have met the requests of every customer from east to west since June of this year."

When asked about Trump's repeated accusation (most of them delivered via Twitter) that OPEC was pushing crude prices higher, al Falih replied, "That is of course not true; we have been looking at more important aspects, which is adequacy of supply."

Al Falih offered the persuasive argument, which has been voiced by some of the cooler-headed western analysts, that "There are geopolitical tensions that have contributed to the markets and to price escalation, and we will try to address those."

Abdelmoumen Ould Kaddour, chief executive officer for Algeria's state-owned Sonatrach Group, told media that "Trump tweets are disturbing, but fortunately this time he did not have an impact on the OPEC decision; the price of oil is subject to many variables, not only the tweet from the president of the U.S."

He added that while Sonatrach could boost oil production by 200,000 barrels per day, there is no need for an imminent increase in supplies.

Russia, the key non-OPEC member in the weekend meeting, also expressed confidence that the taps could be turned on effortlessly if required.

Alexander Novak, energy minister for the former Soviet Union, said his country is ready to hike its oil output after the implementation of U.S. sanctions on Iran: "I don't think we can discuss the exact number at this point but what I can tell you for sure is that we have significant potential to increase our production."

Of course, the OPEC member most eager to take a stab at Trump was Iran, and Hossein Kazempour, OPEC representative for the Islamic Republic, did so by telling media that the brash billion aires incendiary tweets "are doing actually is [leading to] higher prices because the fundamentals even do not warrant this level of prices.

"If they kept quiet, the prices would be cheaper, I am confident about that; I am telling him [Trump], keep quiet, do not do any tweets, and then you will be better off in the prices."

Still, the outcome of OPEC's weekend meeting doesn't detract from the notion that the cartel is badly fractured and conflicting in its individual opinions: for example, while Novak on Monday said high crude prices were to nobody's benefit, it was widely reported last week that the Saudis could accept prices over $80 - which prompted some pundits to suggest that the Saudis in fact could do little about escalating prices and were trying to put on a brave face.