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All eyes on OPEC as Trump gripes over prices

AFP  |  New York 

Just nine days before a big meeting, US had joined the oil-market fray, blaming the group for high prices.

"prices are too high, is at it again. Not good!" the US said on yesterday.

Trump's grousing follows reports suggesting the exporters group was already planning to open the spigots, an outcome the International Agency hinted at in its monthly report released earlier today.

"Statements by several parties suggest that action in terms of higher supply could be on the way," said the IEA, which represents the US and other

The IEA suggested the June 22 meeting in would need to boost output because of a political crisis in that has pinched petroleum output and Trump's decision to exit the nuclear pact, which is expected to result in lower production from the Middle Eastern country.

Under one scenario weighed by the IEA, output from and by the end of 2019 could be 1.5 million barrels per day lower than it is today.

"To make up for the losses, we estimate that Middle East OPEC countries could increase production in fairly short order by about 1.1 mb/d and there could be more output from on top of the increase already built into our 2019 non-OPEC supply numbers," the IEA said.

OPEC flows were already higher in May, led by Saudi Arabia, the IEA said, adding that the kingpin was still in compliance with the deal caps.

Citing "people briefed on the discussions," on Wednesday said had floated several plans to fellow cartel members.

On the sidelines of the opening match of tomorrow, and Saudi will meet to discuss oil policy, added.

Trump's complaints about OPEC come amid expectations of a more costly US summer driving season. A gallon of regular gasoline is currently USD 2.91, up 25 per cent from the year-ago level.

Analysts attribute the rise in prices in part to OPEC's action to defend prices.

OPEC and non-OPEC producers struck a deal in late 2016 to trim production by 1.8 million barrels per day to reduce a global glut that had sent prices crashing. Key producers, including and Russia, have reaffirmed the deal since then.

But Matt Smith, at ClipperData, said Trump himself is responsible for some of the pressure due to the decision to exit the deal.

"It's confusing why the president would come out with a statement like this now," Smith said. "The real catalyst for the recent rise in prices is the sanctions on Iran."

While the world turns its eyes on the OPEC meeting, are also monitoring activity in Trump's home market, where higher prices are feeding more production of

US production of oil came in at 10.9 million barrels per day last week, according to data released today by the US Information Administration, up nearly 17 per cent from the year-ago level.

OPEC itself spotlighted US output in its own monthly report yesterday, citing the growth of non-OPEC supply as one of several question marks hanging over the situation.

Various sources show that "considerable uncertainty as to world and non-OPEC supply prevails," OPEC said, leading to a wide range of estimates for the remainder of 2018.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, June 13 2018. 21:00 IST