- “The price is too high, the King agreed.”
President Donald Trump said this weekend that he had received assurances from King Salman of Saudi Arabia that the Kingdom will increase oil production, “maybe up to 2,000,000 barrels” in response to turmoil in Iran and Venezuela.
President Trump’s comments came Saturday, global financial markets were closed.
ICE Brent Crude stood at 79.42/bbl, NYMEX WTI Crude was at 74.15/bbl at the close Friday in NY.
What I see this morning technically
The 3-Day resistance on NYMEX WTI Crude (USO) at 73.22 is holding well in here, while it holds, the price could come down further to test 72.
ICE Brent Crude at 78.19 may have some room on the Northside to 82 which may be tested before the price comes off.
President Trump Tweeted that he had asked the Saudi King in a phone call to boost Crude Oil production “to make up the difference…Prices to high! He has agreed!”
A little over 1 hour later, the state-run Saudi Press Agency reported on the call.
“During the call, the 2 leaders stressed the need to make efforts to maintain the stability of oil markets and the growth of the global economy,” the statement said.
It added that there also was an understanding that other Crude Oil-producing countries would need “to compensate for any potential shortage of supplies.”
Crude Oil prices have edged higher as The Trump Administration has pushed allies to end all purchases of Crude from Iran following the US pulling out of the nuclear deal between Tehran and world powers.
Prices also have risen with ongoing unrest in Venezuela and fighting in Libya over control of that country’s Crude Oil infrastructure.
The Summer months in the US usually lead to increased demand for Crude Oil, pushing up the price of gasoline.
A gallon of regular gasoline sold on average in the US for $2.85, up from $2.23 a gallon last year, according to AAA.
If President Trump’s comments are accurate,and they likely are, it could immediately knock $2 – 3 off a barrel of Crude Oil.
President Trump is exerting maximum pressure on Iran while at the same time not upsetting potential US midterm voters with higher gasoline prices.
Saudi Arabia currently produces some 10-M BPD of Crude Oil. Saudi Aramco CEO Amin Nasser told journalists in India Monday that the state oil company has spare capacity of 2-M BPD.
“Saudi Arabia can deliver as much as the market would need.” Mr. al-Falih said.
The Trump Administration has been counting on Saudi Arabia and other OPEC members to supply enough Crude Oil to offset the lost Iranian exports and prevent prices from rising sharply.
The Administration has threatened close allies such as SKorea with sanctions if they do not cut off Iranian imports by early November. SKorea accounted for 14% of Iran’s Crude Oil exports last year, according to the US Energy Department.
China is the largest importer of Iranian oil with 24%, followed by India with 18%. Turkey stood at 9% and Italy at 7%.
The US State Department has said it expects the “vast majority” of countries will comply with the US request.
Have a terrific 4th of July Freedom Week
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