At their meeting in Vienna last month, OPEC countries and key ally Russian Federation said they will raise production by a million barrels per day, but analysts are concerned it may not be enough for oil prices to spiral out of control, at least until new USA shale production comes on stream. The U.S. president and the Saudi King spoke on Friday, according to the White House.
Iran's OPEC governor Hossein Kazempour Ardebili said.
On Wednesday, Trump tweeted that OPEC must "REDUCE PRICING NOW!"
"As soon as market participants realize that there is no more scope for further production increases, prices will continue to rise - and will do so noticeably", he said. At that point, any supply disruption would send oil prices skyrocketing. Saudi Arabia boosted oil production in June by the most in five years, according to a Bloomberg News survey. Hopefully, the decision would help stabilize the oil prices and contribute towards mitigating woes of billions of people worldwide.
The clash over OPEC policy and the resumption of United States sanctions on Iran has been amplified this week as Trump continues to target the group which he blames for rising prices. Higher prices could well bring on a recession in the U.S., which would damage GOP chances in the upcoming elections this fall for the U.S. Congress.
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Saudi Arabia says it is ready to use its surplus two million barrels of oil production capacity to even out the global market . But Tehran has threatened to take drastic action on the oil supply in retaliation against Trump's attempt to curb its exports.
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"Iranian crude oil will be offered on the bourse and the private sector can export it in a transparent way", First Vice President Eshaq Jahangiri told an economic event in Tehran broadcasted live on state television. "If production increases as we now forecast, a large share of this would be eroded, leaving the global oil market with a limited "margin of safety", said Morgan Stanley's Rat. But with inventories already below five-year averages and little spare capacity available, oil markets look set to tighten.
Despite the relief from Saudi Arabia and Russian Federation, oil markets remain tense because of unplanned outages from Canada to Venezuela and Libya.
"We do not know what the reaction of Russian Federation and other OPEC member countries will be regarding the violation of the agreement by Saudi Arabia".
Oil prices reversed gains after hitting $75 a barrel on Tuesday, as Saudi Arabia said it is prepared to pump more oil to ease supply constraints in the market.
Washington has been pressing allies in Europe, Asia and the Middle East, including Saudi Arabia, to adhere to the sanctions, which are aimed at pressuring Iran to negotiate a new agreement to halt its nuclear programmes.
China's customs agency said on its website that Chinese tariffs on US goods would immediately be implemented in retaliation.