According to some analysts, extra global production capacity is around 2 to 3 million barrels per day.
While Saudi Arabia is facing mounting pressure from Trump to do more, America's oil sanctions on Iran and trade frictions with China are adding to uncertainties as the planned USA tariffs on Chinese goods are set to start on Friday. It is these countries alone that stand to benefit from bringing additional supplies online, and helps to explain vocal opposition by Iran, Venezuela, and Iraq-who are already pumping near their maximum. And that realization has helped drive up prices over the past two weeks as countries and traders worry about the security of future supplies. On the US's official day of independence (July 4), the President repeated a threat that OPEC nations should lower their oil prices in return for the security support they receive from the US.
To make up for potential shortfalls in supply from Iran sanctions as well as other disruptions including Libya and Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) has agreed with Russian Federation and other oil-producing non-OPEC members to raise output from July. His latest was a reminder that the USA defends many OPEC members for "very little" money.
Speaking to the Wall Street Journal, Michael Cohen, Head of Energy Commodities Research at Barclays, said the market was now "caught between two forces".
"You are hammering on good guys in OPEC", Kazempour said, according to Bloomberg.
Trump took aim at OPEC for not doing enough to offset the supply disruptions and keep down the oil prices, which have risen to their highest mark in more than three years.
"If Libya's oil doesn't return fast to the market it will be an important test to OPEC's spare capacity, especially given that output from Venezuela and Iran is expected to fall significantly in the next couple of months", he added.
"We are making meaningful changes to our supply forecasts: we see lower output from Iran, Libya and Angola ahead, but increase our forecasts for Saudi Arabia", wrote Martijn Rats, equity analyst at Morgan Stanley. It had urged Trump to withdraw from the deal with its rival Iran. "Because the oil market is already in tight supply due to the numerous outages, this would drive worldwide prices (Brent) further up", Commerzbank said in a note.
An Iranian Revolutionary Guards commander, meanwhile, said on Wednesday that Tehran might block oil shipments through the Strait of Hormuz, a major route for transporting crude in the Gulf.
Hossein Kazempour Ardebili was quoted by the oil ministry's website Thursday. Speaking Thursday, Hossein Kazempour Ardebili, the Iranian governor to OPEC, said the USA president was ill-informed on OPEC policies. "You want to exacerbate these differences, but I advise you to join the Vienna talks on Friday". In 2015 an agreement was reached, the Joint Comprehensive Plan of Action, which lifted sanctions against Iran in exchange for limitations being put on its nuclear program.
A USA government report on crude stockpiles rising 1.3 million barrels showing unexpectedly ample supplies after analysts had forecast a decline also weighed on prices this week.
Moreover, as the world's economies recover some of their lost vitality, demand for motor fuel has also increased, driving up prices.
Crude oil prices in recent days have hit their highest levels since late 2014.
- China: US tariffs will hit intl. supply chains
- Former champion Kvitova makes early Wimbledon exit
- Rain in the forecast for July Fourth
- Belgium eliminate Brazil to reach World Cup semifinals
- Soybean farmer reacts to China tariffs: ‘A lose-lose situation’
- Trump says North Korea talks 'going well'
- Swedes not satisfied yet, says Andersson after Swiss win
- These Democrats want to abolish ICE
- Brazil coach Tite not a fan of penalty shootouts
- Diego Maradona slams England for World Cup ‘theft’ against Colombia