Published: Mon, July 09, 2018
Money | By Bruce West

Brent crude firms on drop in U.S. oil inventories, Iran threat

Brent crude firms on drop in U.S. oil inventories, Iran threat

"It does not occur to the US president that it is Trump himself who is driving prices up through his Iran policy", Germany's Commerzbank wrote in a statement, Oil Price reported.

Iran has warned that the strong rhetoric by US President Donald Trump against it and other oil producers could soon push up crude prices to as high as $100 per barrel. If anything, they are driving prices higher as the US defends many of their members for very little $'s. He added, "This must be a two way street".

Trump's scramble to slow down the oil rally comes four months ahead of USA midterms, where analysts say rising gasoline prices could hurt Republicans.

Trump on Wednesday accused the Organisation of the Petroleum Exporting Countries of driving up fuel prices.

"President Trump's tweets are adding to the existing concerns".

As the Trump administration prepares to re-impose sanctions on companies that purchase Iranian crude oil, Iran is responding by threatening to pull back the amount of oil it exports to neighboring countries, which could significantly disrupt the world supply.

Saudi Arabia said it would "use its spare capacity when needed to deal with any future changes in oil supply and demand rates, in coordination with other producing countries", according to a report by the Saudi Press Agency.

West Texas Intermediate crude for August delivery traded at $73.86 a barrel on the New York Mercantile Exchange, down 28 cents, at 3:01 pm in Singapore.

Writing on Twitter Wednesday, the US President said OPEC is doing little to help. International Brent crude slipped below $77 on world markets.

"[It] would be a kind of self-harm for the USA as it would lead to dramatic price hikes in the oil market", Ardebili said, adding that "American consumers" will likely pay higher prices at the pump due to "Trump's unilateralism".

Pressure to liquidate may have accelerated ahead of the USA holiday on Wednesday, said Tariq Zahir, managing member at Tyche Capital in NY.

Tehran blames rising prices on USA sanctions imposed on Iran and Venezuela, founding members of the cartel.

USA budget analysts generally look at the impact of tax changes over a ten-year period ("Estimated budget effects of the conference agreement for HR 1", Joint Committee on Taxation, Dec. 18, 2017).

"OPEC's biggest oil producer at around 8-10 million bbl/day - has now been signalling for some time that it will likely make more oil available, the forthcoming float of state-owned Saudi Aramco is likely to remain a high priority". "It looks as though any additional supply increase from Gulf producers and Russian Federation will not be able to replace lost barrels from Libya, Iran and Venezuela". That means there's a shrinking buffer to protect against the shocks like the eventual loss of Iranian oil or a hurricane in the U.S. Gulf of Mexico.

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