Oil markets volatile as trade conflict between USA and China escalates

Oil markets volatile as trade conflict between USA and China escalates

Futures in NY were 0.3 per cent higher following the US Independence Day holiday, remaining near the highest since 2014.

US President Donald Trump has been attacking OPEC for keeping oil prices artificially high - but officials in Iran insist that Trump's tweets are driving crude prices higher.

USA crude oil is trading on the futures market today for about $73.52 a barrel, down about $1 from the previous session.

West Texas Intermediate was down 1.2% to $73.30 a barrel.

"REDUCE PRICING NOW!", Trump tweeted on Wednesday, accusing OPEC of "doing little to help" lower pump prices. Some members should remember that the United States is defending them for little reciprocal benefits, he added.

Trump, however, is not satisfied with either the current level of oil prices or the announced production increase.

Oil prices rose on Tuesday after Libya declared force majeure on some of its crude exports, while the loss of Canadian supplies helped lifted USA crude to 3-1/2-year highs.

OPEC together with a group of non-OPEC producers led by Russian Federation started to withhold output in 2017 to prop up prices.

King Salman said Saudi Arabia is ready to deploy the nation's spare capacity to add more oil to the market.

"You are hammering on good guys in OPEC", Kazempour said, according to Bloomberg.

"You impose sanctions on major producers, founders of OPEC, and yet you are asking them to reduce the prices?" he was quoted by SHANA, the Iranian oil ministry's news website as saying. Moreover, Obama was able to do this without increasing oil prices because a surge in USA shale oil drilling more than offset lost Iranian exports.

But not all analysts foresee crude prices remaining at current levels: NAB said its oil price forecasts "point to Brent spending the next few months largely in the mid-to-high $70s [per barrel] range, although meaningful OPEC-Russia output increases could push prices lower later in the year and higher USA shale production should impose an upside limit on West Texas Intermediate".

Meanwhile, US crude oil production has soared by 30 percent in the last two years, to 10.9 million bpd.

The president noted that the United States provides security for Saudi Arabia and other Arab Gulf countries through the presence of military forces in the region. Saudi Arabia agrees with Trump on the importance of keeping prices down but has not committed to increasing output sufficiently.

Iranian OPEC Governor Hossein Kazempour Ardebili said on Thursday that Trump had raised oil prices through his tweets. However, high prices also hit businesses and consumers with more costs that are a drag on the U.S. economy.

Iran has threatened to block oil exports through a key Gulf waterway in retaliation against any hostile US action. According to some analysts, extra global production capacity is around 2 to 3 million barrels per day.

Healy Baumgardner, a global fossil fuel adviser and the former press secretary for the Energy Department under President George W. Bush, told UPI there are factors beyond Iran that are influencing the price of oil, notably the growing fears of a global trade war.