USA politics not helping oil prices to cool down
OPEC urged to hike output
OBy Kamel Al-Harami
il prices are hardening without any sign of easing to its current level of $78 a barrel. At the same time, there are requests from the American administration to OPEC to increase production, knowing well that there is no more any spare capacity available and that Saudi Arabia, the biggest global exporter, barely has any free capacity. The maximum that can be done is increasing to 11 million barrels.
Meanwhile, the American administration is demanding for zero export of Iranian crude oil from its current level of 2.5 million barrels, which will create sudden shortage of 1.5 million barrels. Saudi Arabia will have to push for its maximum crude oil production despite its increase of one million from July based on the OPEC agreement of last month. This is under the assumption that the rest of the OPEC countries can maintain their current production without any oil interruptions, which are very unlikely.
It is known that it will be hard for Venezuela to maintain its current level of close to 1.3 million barrels, while there would not be any forthcoming troubles in production for Libya and Nigeria, or any interruptions in oil supply in any non-OPEC countries like the current shortage in Canada and Mexico, or any hurricanes in the coming months in the USA.
The USA threat is not going to work with the tight supply situation, while insisting on calling Saudi Arabia and OPEC to increase throughput with the spare capacity figures at their fingertips.
USA must be realistic and know that China, India and Turkey will not stop importing Iranian oil, as it will lead to further hardening of oil prices and impact their stance and image in the global arena.
The American administration can use its strategic oil reserve volume of more than 700 million barrels to cool down the oil prices. Otherwise, it can test the market and witness how hard oil prices have become. Alternatively, it can stop exporting crude oil outside USA, and keep all its domestic oils to itself, which will force the local oil prices to go down.
The US administration should not be interfering in oil issues, as most of the factors that lead to hardening of oil prices are because of its own doings. Imposing tariffs, insisting on oil boycotts and creating global trade war on China and Europe will not create a friendly atmosphere.
OPEC is currently supplying the USA with about three million barrels of oil per day. Majority is domestic oils, plus Canada and Mexico. Therefore, why this level of pressure is being imposed on the oil organization, which is limited by its spare oil capacity?
Cooling and softening the oil prices starts at home, Mr President!