President Trump’s concern on high oil prices in a fragile global economy sends crude oil prices tumbling.
“Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!” Trump tweeted, his latest in a series of tweets or comments made regarding oil prices since April 2018.
Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!
— Donald J. Trump (@realDonaldTrump) February 25, 2019
Brent crude oil futures dropped by $2.03 at $65.09 a barrel by 11:20 a.m. EST (1620 GMT). West Texas Intermediate (WTI) crude futures fell $1.73 to $55.53 a barrel.
Following the tweet, prices reversed earlier gain, building on expectations for tightening supply and hopes for an agreement a day after the president promised progress in coming weeks over US-China trade talks.
Crude prices have gone up by 20 percent since the start of the year when the Organization of the Petroleum Exporting Countries and non-member producers, such as Russia, cut production to reduce global supply.
US sanctions on exports of crude from Iran and Venezuela have also helped tighten the market and support prices as production in the United States hikes.
Washington surprised oil markets after granting waivers to eight Iranian oil buyers when the sanctions on oil imports started in November. Brent futures dropped 22 percent that month and the waivers influenced OPEC’s decision to agree in December to supply cuts starting in 2019.
Political unrest both in Venezuela and Libya has led to an unsure supply of all oil.
Harry Tchilinguirian, global oil strategist at BNP Paribas in London has told the Reuters Global Oil Forum that supply risk has been ever present with Venezuelan tensions brewing a notch higher. He added that the National Oil Corporation in Libya has refused to start production at the El Sharara field.
Nigeria, Africa’s largest oil exporter has more than 39 people killed in its election violence over the weekend. It could also be an added production risk.
Goldman Sachs analysts said on Monday that the near-term outlook for oil has been modestly bullish over the next two to three months, but added that the outlook for later in 2019 had been weaker due to surging U.S. exports and against an increasingly uncertain economic, policy and geopolitical backdrop.
