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
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.