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Trump declares oil prices too high, blames OPEC

Trump declares oil prices too high, blames OPEC

Under one scenario weighed by the IEA, output from Venezuela and Iran by the end of 2019 could be 1.5 million barrels per day lower than it is today.

But the USA request and a Trump tweet in April that blamed OPEC for high oil prices has caused a split within the oil group, with some members accusing Saudi Arabia of being too eager to do Trump's bidding.

- Donald J. Trump (@realDonaldTrump) April 20, 2018Bloomberg and Reuters reported last week that Trump requested that Organization of Petroleum Exporting Countries members, such as Saudi Arabia, increase their oil production. OPEC members include Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

"Statements by several parties suggest that action in terms of higher supply could be on the way", said the IEA, which represents the USA and other oil-consuming nations.

The Organization of the Petroleum Exporting Countries and some non-OPEC producers, led by Russian Federation, agreed to cut output in 2017 to reduce a supply overhang, which has led to a 60 percent spike in oil prices over the past year.

A mix of new USA sanctions on Iran, chaos in Venezuela and robust global growth has tightened the oil market.

"The president's tweets are really telling the other oil-producing countries to step up your production to make up for the coming sharp declines that are expected in Iranian oil exports", Yergin said. Prices have risen around 60 percent over the previous year.

Analysts attribute the rise in prices in part to OPEC's action to defend prices.

"Saudi Arabia and Russian Federation have already started to lift production", he said.

But Matt Smith, director of research at ClipperData, said Trump himself is responsible for some of the pressure due to the decision to exit the Iran deal.

While there are risks that could influence this estimate, including possibly higher prices, trade disruptions and a potential further strengthening of the U.S. dollar, the IEA said some governments are already considering measures to ease price pressures on consumers.

"It's confusing why the president would come out with a statement like this now", Smith said.

US crude production rose to 10.9 million bpd last week, according to the EIA, but Kilduff said the market appeared able to absorb the increase.

Earlier this month, Bloomberg reported that the Trump administration asked OPEC and Russian Federation to boost oil output.

The IEA report comes a day after OPEC warned of "considerable uncertainty as to world oil demand".

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