Published: Tue, February 26, 2019
Markets | By Otis Pena

Oil price plunges after Trump tells Nigeria, others to ‘relax’

Oil price plunges after Trump tells Nigeria, others to ‘relax’

Brent crude oil futures were down 91 cents at US$66.21 a barrel at 1246 GMT, having earlier risen to a 2019 high of US$67.47, while US West Texas Intermediate (WTI) crude futures were down 74 cents at US$56.52 a barrel.

Global benchmark Brent crude futures were down $2.31, or 3.4 percent, at $64.81 a barrel.

Opec's concern now is that Trump may break with his predecessors, and angering him by not going "easy", as he requested in his tweet, raises the stakes. "The World does not want to see, or need, higher oil prices!"

"If you look at oil prices they've come down very substantially over the last couple of months", Trump said in November as quoted CNBC.

It is worth recalling that crude oil prices plummeted on Monday after President Trump criticized the OPEC for its policy of higher prices.

He said, "as a responsible member of the Organisation of Petroleum Exporting Countries, Nigeria was willing to go along with the Saudi initiative in limiting output so that prices would go up".

OPEC and its allies including Russian Federation began output cuts last month to avert a glut being created by booming American shale-oil supplies and fragile global fuel demand.

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Helping to limit gains are worries over rising US production which recently reached 12 million barrels per day.

Some countries such as Iran have accused the United States of creating market imbalances. Saudi Arabia's Energy Minister Khalid al-Falih said earlier this month that Saudi Arabia would be also cutting its crude oil exports to near 6.9 million bpd next month, slashed from 8.2 million bpd just three months ago.

The oil price has risen by around 20 percent this year, aided primarily by Opec's production cuts, as well as U.S. sanctions on exports of crude from Iran and Venezuela.

Prices of the barrel of the American reference for the sweet light crude oil have regained some shine today and are recovering part of the sharp Trump-sponsored sell off at the beginning of the week. With U.S. supply surging, Goldman Sachs said it expected non-OPEC supply to grow by 1.9 million bpd this year, more than offsetting the OPEC cuts.

Trump has not tweeted about OPEC since early December, right before the producer group and 10 allied nations led by Russian Federation defied his calls to keep pumping at high volumes.

The so-called OPEC+ alliance reached the deal after oil prices sank more than 40 percent in the final quarter of 2018. The move contributed to the pullback in prices. Trump tweeted before the decision was made.

Saudi Arabia has now sharply reversed course.

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