On Monday, oil futures plunged by more than 3 percent after Donald Trump, the President of the United States of America, said that the OPEC should ease its approach on raising crude prices. He said that the prices were “getting too high.”
After reaching their highest in more than three months last week, Brent crude oil futures were down by $2.06, or 3.1 percent, to $65.06 per barrel by 1:54 p.m. EST (1854 GMT) and US crude dropped by $1.76 to $55.50 per barrel, also a loss amounting to 3.1 percent.
In his latest in a series of tweets or comments that are made regarding oil prices since April 2018, Trump said in a tweet: “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!”
After the tweet, the prices reversed the earlier gains that had built on expectations for tightening supply and the hopes for an agreement a day after the president pledged progress in coming weeks over the trade negotiations between the United States and China.
In a client note, president of Ritterbusch and Associates, Jim Ritterbusch, stated: “Trump appears to be attempting to micromanage the oil market by encouraging the cartel, particularly the Saudis, to maintain strong enough production to keep global supplies in surplus.”
He noted: “But as far as the Saudis are concerned, today’s tweets could even embolden their efforts toward restraint.”
The crude prices have increased by approximately 20 percent since the beginning of the year when the Organization of the Petroleum Exporting Countries (OPEC) and non-member producers, including Russia, reduced its production to cut down the global supply.
The sanctions that are imposed by the United States on exports of crude from Venezuela and Iran have also helped in tightening the market and support the prices as the production in the United States increases.
Regarding Trump’s tweet, a partner at Again Capital Management, John Kilduff, stated: “If you read into it, I think there’s speculation there will, in fact, be another round of waivers granted to countries and companies to buy Iranian oil.”
He continued: “That’s also why you’re seeing the negative reaction.”
Washington shocked the market after granting waivers to eight Iranian oil buyers when the sanctions on oil imports began last November. That month, Brent futures dropped by 22 percent and the waivers influenced the decision of the OPEC to agree in December to supply cuts beginning in 2019.