Oil Sets Record Highs As OPEC Spurns Trump’s Request To Boost Output
Oil prices reached four-year highs of $81 per barrel Monday as leaders inside the world’s largest oil-producing organization dismiss President Donald Trump’s request to boost output.
Brent crude rose $2.33 a barrel to $81.13 and hit its highest level since November 2014. Wall Street analysts warn the Trump administration’s recent maneuvers in Iran are likely to increase oil prices still further within the next few months.
“A spike to $90 per barrel is likely” in the coming months thanks to Trump’s decision to reimpose sanctions on Iranian oil exports, JP Morgan wrote in a market outlook Monday. Iran’s exports have fallen dramatically in recent months.
Meanwhile, Trump is pressuring allies to slash their Iranian oil imports down to zero. It’s worked in some areas and not in others.
South Korea dropped its imports to nearly zero, for instance, but Japan and Turkey decreased their intake very little. India’s imports from Iran in August were up 56 percent from the same month in 2017 due to large discounts
Sanctions are taking their tolls on Iran’s once thriving oil industry. The country’s oil exports averaged 2.1 million barrels per day over the past year, and analysts say sanctions will likely take between 500,000 and 1 million barrels per day off the market.
The Organization of Petroleum Exporting Countries (OPEC) and Russia are pledging to increase production to meet any shortfall created because of any fall in Iranian crude oil production, but no official decision has been made yet. Trump railed against OPEC in a tweet Thursday “for higher and higher oil prices,” imploring the crude cartel to “get prices down now!”
Rising oil prices pushed the average price per gallon up around 30 cents from 2017, according to the American Automobile Association (AAA). Renewed economic growth, refinery outages from Hurricane Harvey in 2017 and economic sanctions on Iran contributed to price rises. (RELATED: What Will Trump Do Now That OPEC Ignored His Plea For Lower Oil Prices?)
OPEC’s move to ignore Trump’s request could further galvanize support behind legislation to label OPEC a cartel under anti-trust law, according to analysts at ClearView Energy Partners LLC. The law would allow the U.S. to pursue charges against OPEC leaders for acting as a cartel that artificially increase oil prices.
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