Oil retreated after U.S. President Donald Trump resumed his criticism of OPEC, saying on Twitter that the cartel “must get prices down now!” as the global benchmark crude flirted with $80-a-barrel earlier this week.
Futures dropped 0.9 percent in London and 0.5 percent in New York on Thursday. Trump’s intervention in the oil market follows indications from Saudi Arabia that $80 is an acceptable price level as Iran grows increasingly isolated because of U.S. sanctions. OPEC and allied producers will meet in Algeria this weekend to discuss production targets.
“Will he get what he wants? Probably not,” said Rob Haworth, who helps oversee $151 billion at U.S. Bank Wealth Management in Seattle. “You’ve got room for OPEC to grow and probably offset declining Iranian production. On the downside, you are still losing Iranian and Venezuelan production.”
His thinly veiled threat came in an early-morning Twitter post:
"We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!"
"There’s hope that U.S pressure will force OPEC to raise production, but it remains to be seen if that will bear out," said Ashley Petersen, senior oil market analyst at Stratas Advisors.
Saudi Arabia has markedly increased oil exports to America, a sign OPEC’s leading producer is responding to pressure from Trump. Preliminary import data from the Energy Information Administration showed the kingdom sent 1.013 million barrels a day to the U.S. over the past four weeks, the most since June 2017.
Brent for November settlement fell 70 cents to settle at $78.70 a barrel. The contract traded at a $8.38 premium to WTI for the same month. Prices are up 6.3 percent since Trump first tweeted about OPEC on April 20.
West Texas Intermediate for October delivery, which expired Thursday, fell 32 cents to $70.80 a barrel on the New York Mercantile Exchange. The more-actively traded November contract slipped 45 cents to $70.32.
The president’s first attack on the Organization of Petroleum Exporting Countries came on April 20, just hours after Saudi Arabian Oil Minister Khalid Al-Falih said the group would continue production cuts. Within a month, the kingdom had performed a dramatic U-turn and by June the cartel and its allies were promising to add 1 million barrels a day to the market.
Meanwhile, OPEC was said in July to be consulting with lawyers to prepare a strategy to defend against proposed U.S. legislation that could open up the cartel to antitrust lawsuits, according to people familiar with the matter at the time. Saudi Arabia previously hired former Solicitor General Ted Olson as a lobbyist to campaign against the “NOPEC” bill.
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