US Oil Production Jumps, Eyes 11 Million; Trump Hits OPEC On Prices

From reports that Saudi Arabia would be happy to see oil prices at $80 and even $100 a barrel, the most recent speculation, comments, and various reports have started to suggest that Saudi Arabia and Russian Federation are thinking of reversing some of the production cuts in order to offset supply disruptions from Venezuela and possibly from Iran, after President Trump withdrew the United States from the Iran nuclear deal and announced new sanctions on Tehran that will kick in later this year.

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

Meanwhile, IEA sees non-OPEC supply rising by 2 million bpd this year, lead by growth from the U.S. But infrastructure and logistics could constrain growth and the IEA only sees supply growth of 1.7 million bpd in 2019.

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

After oil prices surged to $80 a barrel in mid-May, Saudi Energy Minister Khalid Al-Falih said that the Kingdom, along with other producers, would ensure the availability of adequate supplies to offset any potential shortfalls.

According to information from data intelligence company Kpler, Saudi crude shipments rose during May to 7.16 million bpd, up 250,000 bpd month-on-month.

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


"It is possible that the very small number of countries with spare capacity beyond what can be activated quickly will have to go the extra mile".

In April, Trump also blasted OPEC on Twitter, accusing the group of "artificially" raising oil prices.

But the International Energy Agency said it believes the prices are unlikely to rise as sharply as they have in the past few months, CNBC reported. "The boom in USA oil and gas production gives us greater leverage against Opec", an official said. Crude oil output was nonetheless down 610,000 bpd on 2017 due to Venezuela's sharp decline.

Opec crude supply edged up to 50,000 bpd last month to nearly 32 million bpd, while the IEA revised upwards its estimate for 2018 non-Opec production growth to 2 million bpd, and in 2019 it expects to see bumper growth, albeit slightly reduced, of 1.7 million bpd. Demand growth for 2018 is also forecast at 1.4 million bpd.

Even if the supply gap, triggered by the return of United States sanctions on Iran and a major political crisis in Venezuela, is plugged, the oil market will likely remain vulnerable to disruption next year, the IEA warned.

There were already signs of a slowdown in the growth of global trade volumes, the IEA said, which was "a concern".

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