Oil Slips as Trump Calls on OPEC to Cut Prices

 Oil prices slipped yesterday after United States President, Donald Trump, called on members of the Organisation of Petroleum Exporting Countries (OPEC) to reduce prices following the announcement of wide-ranging measures to boost US oil and gas output in his first week in office.

Nigeria’s benchmark, Brent crude futures, dropped 53 cents, or 0.68 per cent, to $77.97 a barrel after settling up 21 cents on Friday.

Besides, US West Texas Intermediate crude was at $74.16 a barrel, down 50 cents, or 0.67 per cent. Trump on Friday reiterated his call for OPEC to cut oil prices to hurt oil-rich Russia’s finances and help bring an end to the war in Ukraine.

“One way to stop it quickly is for OPEC to stop making so much money and drop the price of oil … That war will stop right away,” Trump said.

Trump has also threatened to hit Russia “and other participating countries” with taxes, tariffs and sanctions if a deal to end the war in Ukraine is not struck soon, Reuters reported.

Russian President Vladimir Putin said at the weekend that he and Trump should meet to talk about the Ukraine war and energy prices.

However, OPEC and its allies, including Russia have yet to react to Trump’s call to cut prices, with OPEC+ delegates pointing to a plan already in place to start raising oil output from April.

Both benchmarks posted their first decline in five weeks last week as concerns eased about sanctions on Russia disrupting supplies.

Goldman Sachs analysts said they do not expect a big hit to Russian production as higher freight rates have incentivised higher supply of non-sanctioned ships to move Russian oil while the deepening in the discount on the affected Russian grade attracts price-sensitive buyers to keep purchasing the oil.

Still, JP Morgan analysts said some risk premium is justified given that nearly 20 per cent of the global Aframax fleet currently faces sanctions.

“The application of sanctions on the Russian energy sector as leverage in future negotiations could go either way, indicating that a zero risk premium is not appropriate,” they added in a note.

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