Russia's deal with OPEC on crude supply starting to look straightforward

Iran's OPEC governor Hossein Kazempour Ardebili

USA crude futures slipped on Thursday after data showed an unexpected 1.3 million-barrel build in crude inventories.

Iran's governor for the Organization of Petroleum Exporting Countries said President Donald Trump's tweets complaining about oil prices are only serving to drive prices higher, Bloomberg reported.

Brent for September settlement advanced 46 cents to end the session at US$77.76 a barrel on the London-based ICE Futures Europe exchange.

Speaking yesterday in reaction to President Trump's series of tweets about OPEC's fuel prices, the Iranian official accused the U.S president of driving oil prices up with his tweets.

"This must be a two way street", his latest statement read.

Oil was mixed on Friday as a Canadian supply outage supported US crude prices, while an increase in production from OPEC's biggest exporter Saudi Arabia pushed Brent lower.

This week's price action indicates the market appears to have absorbed the recent announcement that an OPEC-led group and Russian Federation will raise output by about 1 million bpd. Today, the U.S. exports more oil than Iran. "While OPEC's effect on oil prices remains notable, the commodity is also rising for other reasons", Trump said Wednesday on Twitter. Analysts however say that he cannot have both; the White House can either drive Iran's oil exports to zero, or it can have moderate United States gasoline prices, but it probably cannot have both.

The challenge from now on for OPEC and for oil producers is not to seek artificial price inflation, but to improve efficiency.

At their meeting in Vienna last month, OPEC countries and key ally Russian Federation said they will raise production by a million barrels per day, but analysts are concerned it may not be enough for oil prices to spiral out of control, at least until new USA shale production comes on stream. The so-called "NOPEC Act" would make OPEC subject to antitrust law, allowing the U.S.to go after OPEC for manipulating the oil market.

In the wake of threats from the United States (US) to reduce its oil revenue to zero, Iran has flouted plans of purchasing goods only from countries that import its oil. Gasoline prices are far from the only influence on voters' opinions, with other issues such as immigration policy and the environment also factoring in. "Your tweets have driven the prices up by at least $10/b".

Oil surged in the past two weeks as the USA pushes allies to end imports of Iranian crude, disruptions persist in places like Libya and American crude inventories shrink.

Saudi Arabia appears to already have gotten the message.

"Further declines in USA crude oil inventories and the significant outage in Libyan oil supply are helping to keep a floor under the market", said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.

"They have to put out another 2 million barrels in my opinion", he said in the July 1 Fox interview.

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