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Published: Sat, July 07, 2018
Economy | By Melissa Porter

Iran tells Trump: stop tweeting, it's driving up oil prices

Iran tells Trump: stop tweeting, it's driving up oil prices

Trump's claim comes after the Organization of the Petroleum Exporting Countries (OPEC), a grouping of oil-producing states that includes Saudi Arabia, already agreed to ramp up production by a million barrels a day at a meeting earlier this month. Lately, drop in USA inventories for the straight second week and a threat from Iranian commander also helped prices to surge. If anything, they are driving prices higher as the USA defends many of their members for very little $'s.

The U.S. government plans to shut Iran's oil exports out of the market from November, demanding that all countries stop buying its oil. "People are firming up their numbers of how much Iranian oil exports will be lost, and how much Opec will increase".

At their meeting in Vienna last month, OPEC countries and key ally Russian Federation said they will raise production by a million barrels per day, but analysts are concerned it may not be enough for oil prices to spiral out of control, at least until new USA shale production comes on stream.

"A key driver of the rise in prices has been the OPEC-Russia deal to cut oil output, compounded by collapsing Venezuelan production and the US decision to end the Iran deal", National Australia Bank (NAB) said in its July outlook.

Meanwhile, US crude oil production has soared by 30 percent in the last two years, to 10.9 million bpd.

The challenge from now on for OPEC and for oil producers is not to seek artificial price inflation, but to improve efficiency. There have been supply outages in Venezuela, Libya, Canada, Angola, Iran, and Kazakhstan, according to the trade publication Oil Price.

Although Saudi Arabia is traditionally known for indirectly dictating most OPEC decisions, it is doubtful whether the Gulf state will have similar clout in current circumstances.

Iran's OPEC governor Hossein Kazempour Ardebili said: "Your tweets have driven the prices up by at least $10 per barrel". "Please stop it", Kazempour said. Over the last 20 years, rig count went from a low of 1,171 in 1999, to a high of 3,900 in February 2012. "REDUCE PRICING NOW!" Trump wrote on Twitter. The objective was to reinvigorate oil prices suffering from a global economic slowdown and a deluge of US shale oil. Should it succeed and Tehran's two million barrels a day be taken off the market, the cost of oil is likely to soar and cause a major headache for Trump domestically; the American public are known to be hostile to anything that increases the cost of filling up their cars. Iran is OPEC's third biggest oil producer, and other OPEC members range from Iran, Saudi Arabia, Kuwait and the United Arab Emirates in the Middle East to Venezuela and Ecuador in South America.

Saudi Arabia has wanted to sell shares in Aramco to bring in foreign investment to diversify its economy, but legal concerns about listing in places like London or NY have presented complications.

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