The US Becomes Highest Crude Oil Manufacturer Worldwide

Galtero Lara
Setiembre 23, 2018

According to the minister, oil at $80 a barrel is a "suitable" price.

Rising U.S. gasoline prices could create a political headache for Trump before November congressional elections by offsetting Republican claims that his tax cuts and rollbacks of federal regulations have helped boost the U.S. economy.

He has consistently complained that oil prices are too high. OPEC members will meet with non-Opec countries, such as Russian Federation, over the weekend to examine their production quotas.

OPEC sources have told Reuters no immediate action is planned and producers will discuss in Algeria how to share a previously agreed output increase. Although Sunday's gathering in Algiers is a committee review, rather than a full-scale official OPEC meeting, most major producers will attend.

The report said that Saudi Arabia wants oil to stay between United States dollars 70 and USD 80 a barrel for now, as the world's biggest crude exporter strikes a balance between maximizing revenue and keeping a lid on prices until US congressional elections.

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As the Brent-WTI spread started widening to average $5 a barrel in the first half of 2018, East Coast refineries again increased their purchases of domestic crude oil, but this time in far lower quantities than in 2015, the EIA noted.

The market remained bullish after news of another fall in US crude inventories. It's finished. Russian Federation initially cut 300,000 barrels a day of production but then added it all back. Thanks to this deal, crude has staged a spectacular recovery from its bruising slump. In April, OPEC and its allies concluded they had achieved their goal of re-balancing the market and even higher prices beckoned.

If only it was that simple.

Trump has urged Saudi Arabia to increase oil production in recent months to combat higher oil prices brought about by his own sanctions on Iran. Russian Federation and other suppliers agreed in December 2016 to join OPEC in trimming output.

Where does OPEC turn now? "It's more of a risk premium than anything else", he said. This estimation was done by the EIA (Energy Information Administration). This competitive challenge, along with demand dynamics that accompany the transition to cleaner energy, give OPEC an incentive to establish a permanent relationship with Russian Federation and a growing number of non-members, he said. A flourishing partnership between its arch-rival Saudi Arabia and Russian Federation shows signs of eclipsing OPEC's preeminence as a global source of crude.

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