Ejiofor Alike with agency reports
As crude oil price rose by one per cent to $63 per barrel Wednesday after slumping six per cent on the previous day, the United States President, Donald Trump, has praised Saudi Arabia for helping to lower oil prices as pressure intensified to impose tougher sanctions on the Middle East ally following the murder of Saudi journalist, Jamal Khashoggi.
In a tweet, Trump thanked Riyadh for the recent drop in oil prices and called for prices to go even lower, likening it to “a big tax cut” that could boost the United States and global economies.
Oil bounced above $63 a barrel yesterday to claw back some of the previous day’s six per cent plunge, lifted by a report of an unexpected decline in United States crude inventories.
Iraqi Deputy Oil Minister, Fayadh al-Nema, said wednesday that OPEC would work to stabilise oil markets, crude prices and supplies at its next meeting.
“OPEC and non-OPEC producers will work together to restore balance to oil prices and supplies to make sure prices stay stable,” he told journalists at an oil exploration conference in Baghdad.
The American Petroleum Institute (API) said on Tuesday that US crude stocks last week fell by 1.5 million barrels, easing concerns for now that a supply glut is building up.
Brent crude, the global benchmark, was up $1 per barrel to $63.53 per barrel after it traded as high as $63.77.
The US crude gained $1.01 to $54.44 per barrel.
However, yesterday’s bounce did little to reverse overall market weakness as crude fell more than six per cent in the previous session and world equities tumbled as investors grew more worried about economic growth prospects.
Brent has fallen by more than 25 per cent since reaching a four-year high of $86.74 on October 3, reflecting concern about forecasts of slowing demand in 2019 and record supply from Saudi Arabia, Russia and the US.
Trump has repeatedly blasted high oil prices, criticised the Organisation of Petroleum Exporting Countries (OPEC) over its production and pressured Saudi Arabia, a major oil producer, to act.
On Tuesday, he pledged to remain a “steadfast partner” of Saudi Arabia even as he said that Saudi Crown Prince Mohammed bin Salman may have known about the plan to murder Khashoggi last month.
The CIA believes Khashoggi’s death was ordered directly by the crown prince, Saudi Arabia’s de facto ruler widely known by his initials MbS, sources familiar with the matter have said.
With US lawmakers calling for tougher sanctions, Trump said he would not cancel military deals with the kingdom.
He said it would be a “foolish” move that would only benefit Russia and China, competitors of the US in the arms market.
A number of US lawmakers, including some of Trump’s fellow Republicans, pushed back sharply on his assessment.
Worried by the prospect of a new supply glut, OPEC is talking about reducing output just months after increasing production.
OPEC, Russia and other non-OPEC producers are considering a supply cut of between one million barrels per day (bpd) and 1.4 million bpd at a December 6 meeting, sources familiar with the issue have said.
Still, Saudi Arabia may find taking action to support prices harder, analysts say, with US pressure to keep them low.
Riyadh could feel more inclined to heed US demands after Trump had promised to be a “steadfast partner” of Saudi Arabia despite saying Crown Prince Mohammed bin Salman may have known about a plan to murder the journalist at Saudi consulate in Istanbul.