- Oil Prices Drop Further as Trump Criticised Saudi’s Plan to Cut Production
Oil prices drop further on Tuesday after U.S President Donald Trump blasted Saudi Arabia for planning to cut oil production in December.
Khalid Al-Falih, Saudi Energy Minister, had said OPEC’s largest producer will cut oil production by 500,000 barrels per day in December and plan to discuss with other OPEC members and allies on the need to cut production in 2019.
The comments were interpreted as a rebalancing strategy that would artificially boost prices from their recent lows to above $70 a barrel.
However, President Trump in a tweet criticised the move on Monday, saying “prices need to be much lower based on supply.”
Still, OPEC estimated that demands will fall faster than expected in 2019. This, the cartel blamed on slowing global economy and the surge in supplies of its rival. Meaning, without production cut, we might see $40 price level in 2019, especially with the Chinese economy slowing down, the largest importer of crude oil.
Falih said OPEC producers may have to cut about 1 million barrels per day in 2019.
Oil prices have fallen from a four year high attained prior to the U.S. granting waivers to some buyers of Iranian crude. However, the uncertainty surrounding global growth due to unending trade war compounded the situation as investors are now expecting weak global growth to hurt demands in 2019.
Brent crude oil, Nigerian type of crude, dropped 2.15 percent to $67.90 barrel at 4:03 p.m. Nigerian time.