U.S. crude oil prices rose above $75 per barrel on Tuesday morning for the first time since 2014 before dropping again unexpectedly in later trading.
The prices have been affected by uncertainty about Libyan and Canadian exports as well as North American imports. The Trump administration’s hard line on Iran has been contributing too. Washington’s decision to restore sanctions against Tehran will impact the volume of oil in the marketplace, likely leading to oil price spikes.
“Because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference,” President Donald J. Trump said in a tweet on Saturday.
Saudi Arabia signaled willingness to produce for future demand, as the Organization of the Petroleum Exporting Countries has also been working to encourage more production worldwide.
“The kingdom is prepared to utilize its spare production capacity when necessary to deal with any future changes in the levels of supply and demand,” a cabinet statement from Saudi Arabia said on Tuesday.
President Trump’s strategy against Tehran includes the plan to eliminate all Iranian oil production. Washington has been insisting that the world has enough capacity to replace Iranian crude. However, Iranian President Hassan Rouhani dismissed the plan as “fantasy.”
“These are exaggerated statements that can never be implemented,” Rouhani told reporters in Bern on Tuesday. “Such a scenario would mean the U.S. was imposing its imperialist policy in flagrant violation of international law.”
The oil price increase will likely continue, according to Morgan Stanley’s analysis.
“Brent oil prices can keep climbing,” stated the article, “possibly reaching $90 a barrel by early 2020.”
