Oil price falls as Trump squares up to Opec chiefs

Year-long deal re­mains de­spite pres­i­dent’s tweet, but Rus­sia re­fuses to com­mit to the full plan

The Daily Telegraph - - Business - By Jil­lian Am­brose

OIL prices re­treated from mul­ti­year highs yes­ter­day as Pres­i­dent Don­ald Trump lashed out at the world’s largest oil-pro­duc­ing na­tions in a meet­ing that ex­posed rifts at the heart of the Opec car­tel. Mr Trump blamed the group for forc­ing global prices to “ar­ti­fi­cially” high lev­els, and warned that it “will not be ac­cepted”, in a tweet dur­ing a key meet­ing be­tween Saudi-led oil pro­duc­ers and Rus­sia.

The meet­ing re­vealed a splin­ter­ing of views be­tween the pair over whether to keep a squeeze on crude pro­duc­tion to drive prices higher or be­gin to ease sup­ply cuts again.

The un­cer­tainty quickly punc­tured the con­fi­dence of the oil mar­ket over the last week, caus­ing prices to plum­met from fresh highs of $74.70 a bar­rel on Thurs­day to be­low $73 be­fore mak­ing a mod­est re­cov­ery.

The Or­gan­i­sa­tion of Pe­tro­leum Ex­port­ing Coun­tries (Opec) met with nonopec na­tions in Saudi Ara­bia yes­ter­day to dis­cuss the progress of its year-long sup­ply deal just days af­ter oil prices ral­lied to their high­est level since De­cem­ber 2014.

De­spite the quicker than ex­pected re­cov­ery of oil prices to over $74 a bar­rel, the Saudi en­ergy min­is­ter is un­der­stood to be eye­ing even higher mar­ket lev­els to sup­port the mega-float of the Saudi Aramco oil gi­ant early next year. Pres­i­dent Trump said it “looks like Opec is at it again”, adding that “oil prices are ar­ti­fi­cially very high” and “will not be ac­cepted”.

The tweet puts Mr Trump at odds

‘I can­not an­swer as we do not have a full idea how the mar­ket is go­ing to per­form in the forth­com­ing months’

with the Saudi gov­ern­ment af­ter months spent cur­ry­ing favour in an at­tempt to se­cure the Aramco float on the New York Stock Ex­change.

In re­sponse to the tweet, Khalid Alfalih, the Saudi en­ergy min­is­ter, told re­porters at the event that “there is no such thing as ar­ti­fi­cial prices”.

He added that “there is ca­pac­ity for higher prices” with­out hurt­ing de­mand be­cause “we’ve seen prices sig­nif­i­cantly higher in the past”.

The sup­ply deal is due to re­main in place to the end of the year but Rus­sia’s en­ergy min­is­ter, Alexan­der Novak, re­fused to com­mit to the full plan, in a break that could de­rail the agree­ment.

“I can­not give you a pre­cise an­swer be­cause we do not have the full idea how the mar­ket is go­ing to per­form in the forth­com­ing months. We need to mon­i­tor the sit­u­a­tion,” Mr Novak said.

Oil prices traded above $100 a bar­rel be­fore 2014 when a glut of oil sup­ply caused prices to col­lapse to 12-year lows, forc­ing Opec to strike a deal with Rus­sia and pro­duc­ers out­side of the car­tel to rein in pro­duc­tion.

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