US President Donald Trump call for that producer club Organization of the Petroleum Exporting Countries (OPEC) increase productivity as well as lower oil prices to soften the influence of U.S. sanctions against Iran. This comment from Trump resulted in lowering Oil prices, lengthening a fall from Friday that ended weeks of rallying.
Brent crude futures and U.S. West Texas Intermediate (WTI) crude futures fell about 3% in the earlier session. On the other hand traders believed the market was making its move more towards voluntary supply cuts led by OPEC, de facto controlled by the globe’s top exporter Saudi Arabia.
Trump’s statements caused a selloff, putting at least a brief ceiling on a 40% price rally in oil prices since the start of 2019. The rally had gained momentum in April after Trump tightened sanctions against Iran by ending all exemptions that major buyers, especially in Asia, previously had.
According to statement made by ING bank, that they also believe the globe’s top oil exporter Saudi Arabia will raise output sometime around May, something they were possible to do at least in the lead up to summer. ING bank also added, Saudi Arabia could raise output by 500 million barrels each day (bpd) in May then it will still be in acquiescence with the OPEC+ (non-OPEC producers) agreement for that month.
The cuts have been supported by some non-OPEC producers, particularly Russia, but experts said this collaboration may not last further than a meeting scheduled for June between OPEC and its other associates, a group well-known as OPEC+.
Russia may boost its oil production as it is looking forward to meet China’s oil demand needs as Beijing making efforts to substitute the imports of oil it regularly acquires from Iran.
Futures brokerage OANDA senior analyst Edward Moya, said Russia appears to have every motive to continue increasing oil production levels and the base case should start to become whether OPEC+ decide upon increasing production cuts, with tweaks to cover the shortfall from Iran.