Published: Wed, July 11, 2018
Markets | By Otis Pena

Trump’s order for OPEC to reduce prices is insulting - Iranian oil minister

Trump’s order for OPEC to reduce prices is insulting - Iranian oil minister

Another option President Trump has for increasing the supply of oil is tapping into the strategic petroleum reserve to reduce pressure on oil prices.

"Putting an actual nominal level of geopolitical risk, supply crunch concerns as well as Opec plus compliance shirking into the current level of oil prices is challenging, but we view that at least an upside risk of Brent and WTI exceeding north of $85 and $80, respectively, in Q3 2018, depending on the magnitude of these disruptions and how they impact the overall supply-demand balance", Ehsan Khomas, head of Research and Strategist for Mena at MUFG, said.

"It's an insult to the people and national sovereignty of these countries and it also destabilises the market", he added.

"So based on those assumptions, we estimate zero Iran exports could push oil up by $50 if Saudi Arabia caps out", BofA Merrill Lynch analysts said.

Earlier this week, Trump lashed out at OPEC, accusing the oil organization of failing to help the USA to reduce domestic gasoline prices.

In his latest tweet on the subject on Wednesday, Trump said that the "OPEC Monopoly must remember that gas prices are up & they are doing little to help". This must be a two way street.

The move by South Korea, one of Iran's main customers in Asia along with China and Japan, comes as it is in talks to seek an exemption from U.S. curbs on buying Iranian oil, in line with a waiver it received during previous sanctions, Reuters reported.

Think your friends would be interested? In May, Washington announced it was walking away from an global deal on Iran's nuclear program, and said it would impose fresh sanctions on Iran's energy sector.

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Washington's withdrawal from the landmark Iran nuclear deal was widely criticized across the world.

On Saturday, a petroleum ministry official told state-run IRNA news agency that the US sanctions against Iran's oil exports will weaken the OPEC.

"Cushing is clearly screaming out for crude, with the prompt few months more than $2 backwardated", said Virendra Chauhan, an analyst at Energy Aspects in Singapore.

"Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue from crude oil sales", a senior State Department official told a news briefing this month.

"Iran's oil will not lose its customers because a lot of companies are buying oil from the country", said Moayyed Hosseini Sadr, the ministry advisor.

He added such policy is against the founding principles of OPEC.

"The Korean government is negotiating with the United States to get exemptions from the restrictions on Iranian oil purchases", it said.

South Korea has bought almost 296,000 barrels of oil from Iran in the first five months of the year, and is the biggest buyer of Iranian oil after China and India.

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