LONDON: Oil prices fell on Monday, extending the Friday decline that halted a weeks-long rally, after President Donald Trump demanded that producer club OPEC raise output to soften the impact of U.S. sanctions against Iran.
Brent crude futures were down 48 cents, or 0.7 percent, at US$71.67 a barrel by 1100 GMT. U.S. West Texas Intermediate (WTI) crude futures lost 24 cents, or 0.4 percent, to US$63.06.
Both benchmarks fell by about 3 percent in the previous session.
Trump on Friday said that he told the Organization of the Petroleum Exporting Countries (OPEC) to lower oil prices.
“Gasoline prices are coming down. I called up OPEC, I said you’ve got to bring them down. You’ve got to bring them down,” Trump told reporters.
“Spoke to Saudi Arabia and others about increasing oil flow. All are in agreement,” the president later tweeted.
Trump’s remarks triggered a sell-off, putting at least a temporary ceiling on a 40 percent price rally since the start of the year.
(GRAPHIC: Brent crude oil prices – https://tmsnrt.rs/2XWLBqT)
The rally had gained momentum in April after Trump tightened sanctions against Iran by ending all exemptions previously granted to that major buyers.
U.S. sanctions on Venezuela are also working to tighten global supply as fighting in Libya threatens to curb output there as well.
“We are dealing with a market that’s not actually short of supply but is short due to politically-motivated action, and we know how quickly that can be turned around if necessary,” Saxo Bank analyst Ole Hansen told Reuters.
“Being a bear in the market is a very lonely place now.”
Traders said the market was shifting focus to the voluntary supply cuts led by OPEC, the de facto head of which is the world’s top oil exporter, Saudi Arabia.
“We are of the view that Saudi Arabia will increase output as soon as May, something they were likely to do anyway in the lead up to summer,” ING bank said.
“The Kingdom could increase output by 500 million barrels per day (bpd) and still be in compliance with the OPEC+ deal for the month of May.”
The cuts have been supported by some non-OPEC producers, notably Russia, but analysts said this cooperation may not last beyond a meeting between OPEC and other allies, a group known as OPEC+, scheduled for June.
“Russia appears to have every reason to resume ramping up production levels and the base case should start to become (that) we will not see OPEC+ agree upon extending production cuts, with tweaks to cover the shortfall from Iran,” said Edward Moya, senior analyst at futures brokerage OANDA.
(Additional reporting by Henning Gloystein; Editing by Louise Heavens and David Goodman)
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