Iran blames Trump for the spike in oil prices

An energy spokesperson for former U.S. President George W. Bush said there are factors outside of OPEC that are driving the price of oil.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  July 5, 2018 at 9:36 AM
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July 5 (UPI) -- The Iranian governor to OPEC said Thursday the U.S. president should avoid stepping into the production group's work with calls to drive down the price of oil.

U.S. President Donald Trump continues to put pressure on U.S. allies in the Organization of Petroleum Exporting Countries. Weekend discussions with Saudi Arabia, the de facto leader of OPEC, led to pledges from Riyadh to ensure the market was stable given lingering concerns about supply deficits.

On Wednesday, the president took to Twitter to say OPEC wasn't doing enough to address higher prices. Some members should remember that the United States is defending them for little reciprocal benefits, he added.

"This must be a two way street," his latest statement read. "REDUCE PRICING NOW!"

The price for Brent crude oil was just above $78 per barrel as of 8:16 a.m. EDT, up from the June 28 close of $77.85. U.S. retail gasoline prices, meanwhile, were at their highest level in four years for Wednesday's national holiday.

Trump's administration has been a firm supporter of Saudi Arabia, signing a $110 billion defense deal during his first full year in office. Earlier this year, the Saudi Arabian Oil Co., known commonly as Saudi Aramco, agreed to a joint research effort with the Center for Strategic and International Studies, a U.S. think tank.

Anthony Cordesman, a scholar at CSIS, wrote the week before the handshake that Saudi Arabia is the "most important single security partner" for the United States in the Middle East.

Iran in the past has said some OPEC members are tools of the Trump administration. Speaking Thursday, Hossein Kazempour Ardebili, the Iranian governor to OPEC, said the U.S. president was ill-informed on OPEC policies.

"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. "Since when did you start ordering OPEC? Your tweets have driven the prices up by at least $10 per barrel."

Mounting international isolation in Venezuela, one of the founding members of OPEC, as well as U.S. sanctions pressure has pushed its oil production to historic lows. Trump's decision in May to pull out of the U.N.-backed nuclear agreement with Iran, meanwhile, means sanctions on the Iranian energy sector snap back into place in November.

Ardebili said Iran is also on the "two-way street" as a member of OPEC. He added there's not much spare capacity on the market to allay Trump's concerns.

Analysis from Swiss investment bank UBS said spare capacity, the amount of extra oil a producer could put on the market in short order, was approaching a 10-year low. That means there's a shrinking buffer to protect against the shocks like the eventual loss of Iranian oil or a hurricane in the U.S. Gulf of Mexico.


"Iran is not in a position to be warning the United States about anything," she added. "This is a response to the U.S. sanctions that are squeezing them."

Libya halted operations at oil ports last week because of national security issues. An explosion at a transformer station at the Syncrude oil facility in Canada, meanwhile, could idle about 350,000 barrels of oil per day until the end of July.

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