US President Donald Trump's stern warning to the OPEC (the Organisation of the Petroleum Exporting Countries) alliance plunged the crude oil prices 54 cents (0.7 per cent) to $77.7 per barrel on Thursday. A week after the US President said King Salman of Saudi Arabia had agreed to increase oil production by up to 20 lakh barrels, he said the OPEC nations were doing little to curb the rising crude oil prices. He even indicated the OPEC nations' reluctance could hurt their business prospects in the long run as trade, he said, is a "two-way street".
"The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $'s. This must be a two-way street. REDUCE PRICING NOW!" tweeted Donald Trump.
The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $'s. This must be a two way street. REDUCE PRICING NOW!- Donald J. Trump (@realDonaldTrump) July 4, 2018
The escalating trade row between Washington and Beijing, which triggered another sell-off in Asian stocks on Thursday, was also felt in oil markets, with China warning it could introduce duties on US crude imports at an unspecified date, reported Reuters. At US West Texas Intermediate (WTI), crude futures plunged 37 cents (0.5 per cent) to $73.77 per barrel.
The OPEC nations that comprises 15 member countries and non-Opec nations, led by Russia, have been withholding oil production to boost the prices after it touched an all-time low two years back. These oil exporting nations had last month reached an agreement to boost the production by 1 million bpd. Saudi Arabia and non-OPEC leader Russia had said they were reaching a consensus to produce about 1 per cent of the global supply.
The US government's plan to reintroduce oil exporting sanctions against Iran from November had caused a rise in crude oil prices. Other reasons responsible for the uptick in crude price are the Russia-OPEC deal on withholding crude output and a sharp reduction of oil in Venezuela.
India has not taken a firm stand on the Iranian oil imports versus the risk of the US sanctions debate yet, but the country's largest fuel retailer, Indian Oil Corporation, has said it is fully-prepared.
In the meantime, Iran has asked fellow OPEC members to "refrain from any unilateral measures" to increase oil production beyond the 1 million additional barrels of crude a day it already agreed to at the last OPEC meeting.