Crude oil prices fell more than 3% Monday after President Trump urged Opec via Twitter to lower the cost of crude, putting pressure on the cartel and friends to tone down their price-boosting output cuts.
“Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!” the President said in an early morning tweet.
The message comes nearly two months into a fresh round of production cuts totaling 1.2 million barrels per day (Mmbpd) from Opec and other nations, collectively known as Opec+.
The producers meet in mid-April to review the deal, which is scheduled to last through the first six months of 2019.
U.S. West Texas Intermediate crude futures ended Monday’s trading session down $1.78, or 3.1%, to $55.48 a barrel, Kallanish Energy reports. On Friday, WTI hit a more-than three-month intraday high of $57.81/Bbl.
International benchmark Brent crude futures fell $2.36, or 3.5%, at $64.76/Bbl. Brent hit $67.73/Bbl Friday, its highest intraday level since mid-November.
The Opec+ alliance reached a deal after oil prices dropped more than 40% in the final quarter of 2018. The group first began curbing output in 2017 to end a brutal price downturn/supply glut, but lifted the caps last June as oil prices hit 3½-year highs ahead of Trump’s sanctions on Iran, Opec’s third-biggest producer at the time.
Under pressure from Trump, the producers, and Saudi Arabia in particular, raised output through November. That month, Washington surprised them by allowing some of Iran’s biggest customers to continue importing its oil as U.S. sanctions returned. The move contributed to the pullback in prices.
Saudi Arabia has now sharply slowed its production. After its output surged to a record 11.1 Mmbpd in November, it has cut production to 10.2 Mmbpd. Saudi Energy Minister Khalid al-Falih has said the Saudis will cut even further, pumping 9.8 Mmbpd in March.
The Trump administration further disrupted global crude flows last month by blocking oil shipments to and from Venezuela, which mostly impacts shipments of heavy crude used by U.S. refiners. The Iran sanctions and OPEC cuts have already tightened supplies of medium and heavy sour crude.
This post appeared first on Kallanish Energy News.
