President Donald Trump has caused on OPEC to keep oil prices low. In a tweet on Thursday, Trump said the “OPEC monopoly have to get prices down now.”
But according to one oil expert, the cartel and its allies are running out of ways to do that.
“He wants to persist in pressure on his key OPEC allies like Saudi Arabia,” said Helima Croft, universal head of commodity strategy at RBC Capital, on CNBC’s “Futures Now” on Thursday. “How much varied can Saudi do? How much more can Russia do in the near term?”
Trump “shortages Saudi Arabia, he needs Russia, he needs UAE to fill the looming present gap which is coming on Nov. 4 when the oil sanctions kick back in,” Croft required. “This is really pressure on the producers to do as much as they can, but again the grill mark is how much more gas is left in the tank for OPEC?”
The cartel’s yield capacity, a measure of its ability to cushion price swings, is below 3 percent of tot up global production, or around 1.84 million barrels per day, according to the Strength Information Administration. A lower percentage means it is less able to very soon raise production to counter spikes in crude prices.
The coming U.S. advocates on Iran are already proving effective in blocking the country from broad markets, producing a knock-on effect squeezing global oil supplies, implied Croft.
“There’s no signs that [Trump is] backing off at this decimal point and they’ve signaled so strongly to producers that they’re serious all over enforcing the sanctions,” she said. “Countries like South Korea deliver already essentially gone to zero at this point. European refineries are curl down their Iranian purchases.”
Croft sees a supply girlfriend taking Brent oil to the mid-$80s through to the end of the year, an 8 percent increase from latest levels. West Texas Intermediate crude should see a smaller engender to the low $70s to mid-$70s.