The growing United States pressure on the world to totally stop buying Iranian oil has produced a warning from top Iranian officials that the world economy, and America's economy in particular, would pay a severe price from such a ban.
The two urges don't mix, however. The American Petroleum Institute was said to report that inventories dropped by 4.51 million barrels last week, while a Bloomberg survey also estimated a decline. Meanwhile, stopping Iranian oil sales would take 2.4 million barrels a day off world markets. Since when did you start ordering OPEC! "The news of their commitment to ramp production quickly enough along with some evidence that Saudi Arabia is ramping production is giving the market some pause". More so, ongoing supply disruptions in Libya, Canada and Venezuela also help keep the prices near multi-year peaks.
Production at Syncrude Canada's 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta, was hit by a power outage last month and is likely to remain offline through July, helping drain US inventories.
To make up for potential shortfalls in supply from Iran sanctions as well as other disruptions including Libya and Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) has agreed with Russian Federation and other oil-producing non-OPEC members to raise output from July. If anything, they are driving prices higher as the US defends many of their members for very little $'s. Last month, in an interview with Reuters, he said that "you (Trump) can not place sanctions on two OPEC founder members and still blame OPEC for oil price volatility".
Those following oil markets will recall that cooperation between OPEC and non-member nations was formalized in late 2016 under a joint pledge to cut production by 1.8 million b/d (1.2 million b/d from OPEC and 600,000 b/d non-OPEC).
The president's call to "reduce pricing" was an apparent reference for oil producers to churn out more supply in order to contain spiking oil prices. Saudi Arabia agrees with Trump on the importance of keeping prices down but has not committed to increasing output sufficiently. While the European countries decided not to follow Donald Trump, it remains uncertain if companies are willing to take the risk to be on bad terms with Washington by investing in Iran.
Now, oil prices are slipping a bit, mainly because of concerns that a trade war will slow economies around the world.
Iran, however, has responded with threats.
Oil surged in the past two weeks as the USA pushes allies to end imports of Iranian crude, disruptions persist in places like Libya and American crude inventories shrink.
Hossein Kazempour Ardebili was quoted by the oil ministry's website Thursday.
Kazempour Ardebili said Trump was trying to fuel tensions between Iran and Saudi Arabia in advance of a meeting between Iran and the five remaining signatories of a deal restricting Iran's nuclear program.
"We're continuing to see - and I expect the trend will continue - lower inventories in Cushing in July, resulting in a very tight light sweet crude market", said Andrew Lipow, president of Lipow Associates. For the Saudis, increased market share and a weakened Iran are two good reasons to lift output on their own.