US Politics: Trump's OPEC tweet expands threat of trade war

US oil touches $75 amid fears Iran will block Middle East shipments

Oil traded near its highest in three and half years on Thursday, boosted by potential disruptions to flows from Iran and the Middle East as U. S. President Donald Trump says OPEC should cut prices.

Brent for September settlement lost 52 cents to $77.72 a barrel on the London-based ICE Futures Europe exchange.

US crude futures were up 32 cents at 74.46 dollars.

The Saudis' pledges don't seem to have placated U.S. President Donald Trump, who resumed attacks on OPEC on Twitter on Tuesday for failing to moderate prices. However, summer months in the USA usually lead to increased demand for oil, boosting the price of gasoline in a midterm election year.

Prices were also pushed up by looming US sanctions against Iran, which threaten to cut supplies to an already tight market despite pledges by producer cartel OPEC to raise output to make up for the disruptions.

As the Trump administration prepares to re-impose sanctions on companies that purchase Iranian crude oil, Iran is responding by threatening to pull back the amount of oil it exports to neighboring countries, which could significantly disrupt the world supply.

U.S. West Texas Intermediate and global benchmark Brent crude oil futures are trading lower early Thursday and for the week after President Trump turned up the heat on OPEC to reduce prices for crude.

NAB said its oil price forecasts "point to Brent spending the next few months largely in the mid-to-high $70s (per barrel) range, although meaningful OPEC-Russia output increases could push prices lower later in the year and higher U.S. shale production should impose an upside limit on WTI".

The escalating trade row between Washington and Beijing triggered another sell-off in Asian stocks and was felt in oil markets, with China warning it could introduce duties on US crude imports. "This must be a two-way street", he wrote.

Investors had questions as "to whether Saudi Arabia and Russian Federation could or would really be able to ramp production quickly enough", said Rob Haworth, who helps oversee US$151 billion at U.S. Bank Wealth Management in Seattle.

OPEC members in coordination with Russian Federation just reached an agreement to pump an additional 1 million barrels a day onto world markets.

At 08:23 a.m. EDT today, WTI Crude was down 0.78 percent at $72.37, and Brent Crude traded down 1.23 percent at $76.44.

The UAE on Tuesday said it will increase production by 0.2 million barrels per day to 3.5mbpd by the end of 2018 to help meet any oil shortage and will also adhere to the conformity level.

The UAE was the fourth largest Opec producer with 2.89 million barrels per day in June after Saudi Arabia (10.3mbpd), Iraq (4.5mbpd) and Iran (3.7mpbd).

Harry Tchilinguirian, head of commodities strategy at BNP Paribas, said when an investor does not have a strong view on which way the price of crude oil futures might move, they tend to take a bet on options instead, to protect themselves.

This was on top of the even bigger draw of 9.228 million barrels of crude oil reported for the week-ending June 22.

"We're continuing to see - and I expect the trend will continue - lower inventories in Cushing in July, resulting in a very tight light sweet crude market", said Andrew Lipow, president of Lipow Associates.

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