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Home / Business / OPEC, Russia Back continued oil cuts, drawing Trump Ire

OPEC, Russia Back continued oil cuts, drawing Trump Ire

JEDDAH, Saudi Arabia – A group of some of the world's largest crude oil producers said they would keep a tight grip on production for the rest of the year, and perhaps until the next day, by hawking a risky bet so far 18 months ago, oil prices were cut back and increased

Official representatives of OPEC, Russia and other major producers gathered on Friday to discuss compliance with agreements until 2016 to restrict production and erase the flood of stored oil sloshes around the world.

When the meeting ended, President

Donald Trump

weighed via


It appeared that they were responding to the comments sent by the officials in which they applauded the pact and pledged to remain for the time being. Mr. Trump called oil prices "artificially very high", shortly thereafter in a tweet, which stimulated the economic and geopolitical challenges of the recent rise in crude oil prices

The pact has worked well: Members The Organization of the Petroleum Exporting Countries and the Large Non-oil Countries OPEC producers, led by Russia, have held on to eliminate 2% of world production as measured at that time.

This has helped to eliminate the flood. With the demand for healthy economic growth in the US, Europe and Asia rising, the pact has also helped raise international oil prices to a relatively high level of over $ 70 a barrel today. On Friday, Brent Crude Futures, the international benchmark, hit its highest price since November 201


On Friday, officials from Saudi Arabia and Russia signaled that they were satisfied with the results but had not finished yet. Saudi Arabian Oil Minister Khalid al-Falih said: "It is not a mission that is fulfilled." His Russian counterpart

Alexander Novak

Emagazine.credit-suisse.com/app/art … = 157 & lang = DE Moscow relies 100 percent on compliance with the requirements of debt reduction. Englisch: emagazine.credit-suisse.com/app/art … = 263 & lang = en. He said the producers in the pact "need to extend the partnership [the] until next year."

Mr. Novak had previously signaled that Russia was content with today's higher prices, which led some observers to speculate that he might try to end the pact if it expires at the end of the year. Russian producers have pressured the Kremlin to open their taps.

Mr. Falih signals a moderation in the current cuts. He said that the producers that are part of the pact would not reduce production indefinitely. And he said that every new production regime should not "shock" the market next year. Mr. Falih also aimed at the president, told reporters the meeting "There is no artificial price"

After Mr. Trump's tweet, oil prices quickly lost 50 cents a barrel. Prices rose later in the day and Brent crude rose 0.4% to $ 74.06 a barrel. On the New York Mercantile Exchange, futures on West Texas Intermediate were down 0.1% at $ 68.38 a barrel.

The Saudi and Russian oil authorities said they and their allies reached more than 140% of their agreed oil production cuts in March. The voluntary cuts are not the only problem that promotes crude oil. Geopolitical tensions in the Middle East have boosted sentiment, especially after a strike by the US government last week. Syria is not pumping much oil, but concerns about broader military intervention in the oil-rich Middle East shook the markets.

Investors are also watching the US position on the international nuclear deal with Iran, which is due to be reviewed in May. A reintroduction of sanctions could affect oil production and reduce the global supply of one of OPEC's largest members. Production in Venezuela, another major producer, fell sharply during the economic crisis.

Brent "is ticking higher every day as the OPEC cuts are intact, global oil demand growth is firm, Venezuela's oil production is in a spiral of death," he said. Iran sanctions are imminent and sanctions against Russia are possible on oil, not just aluminum

Bjarne Schieldrop,

Chief Financial Commodities Analyst at SEB Markets

Falih and Novak's bullish comments on early Friday were fueled by financial services and TV news channels around the world, which modestly boosted the oil markets early Friday. That is, until Mr. Trump tweeted just before seven in the morning, and about an hour after the oil officials addressed a press conference in Jeddah.

"Looks like OPEC is back," he wrote, calling the oil prices "artificially high"! Not good and will not be accepted! "

Mr. Trump's tweet was a relatively unusual distraction for the president in commodity market commentary, though he tweeted about OPEC before he was elected president, underscoring the economic and geopolitical sensitivities that surfaced simmer when the oil has risen in recent months.

Rising oil prices can quickly lead to higher pump prices, which act as a tax on American consumers who often withhold spending, and can also hit fuel-intensive industries such as aviation and manufacturing. But overall, they are not the same threat to the US economy as they once were.

Over the last ten years, US shale oil producers have revolutionized the American oil industry, boosting production and drastically reducing the country's dependency on foreign oil imports Revitalized industry has come in many parts The country has become a major job creator and investment magnet that has not experienced much growth during the oil boom.

The Secretary-General of OPEC,

Mohammed Barkindo,

On Friday it was said that the US oil industry is also "benefiting" from the production cuts. "We are all in the same boat," he told reporters.

Still, higher prices have effects beyond the US limit. They support the finances of some of Washington's thorniest irritations, including Russia and oil-rich Iran. In times of oil price hikes in the past, higher prices have given both Moscow and Teheran more financial flexibility to carry out their foreign policy.

Despite Trump's contention that the US would not stand for higher prices, Washington's current leverage on crude oil markets is limited. Oil production in the US depends on many independent producers, not on a state-owned oil company that, like OPEC, can turn the taps on or off. Trump could sell oil from the US Strategic Petroleum Reserve or try to pressure Saudi Arabia to end a deal to limit production.

Tom Pugh,

A resource economist at Capital Economics said he believes that neither measure would be successful.

"There's very little he can really do, unlike the Saudis who control their own production," Mr. Pugh said. "And it's just a tweet for the moment, we have to see if that's going to be an issue."

Mr. Trump has warmly embraced Saudi Arabia on many other fronts, recently host of the Crown Prince and de facto leader of the country,

Mohammed bin Salman.

While the two discussed a number of issues publicly, from defense contracts to geopolitics in the Middle East, Saudi oil policy was not one of them.

Write to Benoit Faucon at [email protected] and Summer Said at [email protected]

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