United States oil request won’t stop stockpiles dwindling - Goldman Sachs

WTI Crude Oil

In the previous round of sanctions against Tehran, in which the European Union had taken part, Iranian oil exports plummeted by more than half to below 1 million barrels per day.

Light, sweet crude for July delivery fell 0.3% to $65.74 a barrel on the New York Mercantile Exchange.

"It's insane and astonishing to see instruction coming from Washington to Saudi to act and replace a shortfall of Iran's export due to their Illegal sanction on Iran and Venezuela", Hossein Kazempour Ardebili, Iran's representative to the Organization of the Petroleum Exporting Countries (OPEC), told Reuters.

Brent crude futures fell 45 cents to $76.87 a barrel by 13:33 GMT.

The surge in U.S. production has pulled down U.S. WTI crude into a steep discount versus Brent to more than $11 per barrel, its steepest since 2015.

The Organization of the Petroleum Exporting Countries and other producers including Russian Federation have cut output since 2017 to reduce a global crude glut.

"OPEC will not bow and obey" to US pressure to increase oil production, said Hossein Kazempour Ardebili, one of Iran's representatives to the organization.

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"A consensus for higher oil prices and revenues will be the bedrock of every OPEC nation".

The US has quietly pressed Saudi Arabia, the group's biggest member, and other producers to raise supply by about 1 million barrels a day, people familiar with the request said this month.

Oil prices fell on Wednesday on worries that global supply is climbing after US inventories rose unexpectedly and Saudi Arabia and other big producers signalled that they may increase output.

Shortly before US President Donald Trump announced his decision to withdraw his country from the Iran nuclear deal, the White House reportedly attempted to ensure that Saudi Arabia would help maintain oil prices at a stable level.

Oil rose by almost $1 a barrel yesterday, lifted by concern about a steep drop in exports from Venezuela, although surging US production kept gains in check. Now the United States is asking Saudi (And Russia) to raise oil production by 1 million bdp, but as this will drive prices lower, will the OEPC upcoming June 22 meeting agree to that?

"This seems to be an intervention in OPEC's supply policy ..."

True, US sanctions will hit Iran oil exports but, like the loss of Venezuela output, this will be offset by higher production in other oil provinces. Market participants are also anticipating a softening in supply limits from OPEC and Russian Federation at their meeting on June 22, to offset supply outages in Venezuela.

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