United States (U.S.) President Donald Trump reiterated his call for the Organisation of the Petroleum Exporting Countries (OPEC) that exerts significant influence over oil prices to take action to halt crude's upward climb.
Iranian President Hassan Rouhani appeared on Tuesday to threaten to disrupt oil shipments from neighboring states if Washington continued to press all countries to stop buying Iranian oil.
The decline in fuel inventories was largely down due to the outage at Syncrude Canada's 360,000 barrels per day oil sands facility near Fort McMurray, Alberta. Trump's trade policies on steel and aluminum could stifle growth in the US oil sector.
Volatility in the Middle East and USA foreign policy can have a major impact on oil prices.
But while some have interpreted the Saudi move as a traditional Saudi card to always scramble to soothe American frustration and oblige to United States demands, other reports have suggested that Riyadh's move is the result of deep political calculations: step in to stabilize oil prices and compel the U.S. to adopt tougher measures on Iran. Trump tweeted the group is "doing little to help" reduce gasoline costs and "if anything, they are driving prices higher". S. defends many of their members for very little dollars. "This must be a two way street, REDUCE PRICING NOW!"
Trump criticized OPEC on Twitter again for failing to lower prices for consumers. "Your tweets have increased the prices by at least $10".
Saudi Arabia has notably refrained from saying how big an output increase may happen. It had urged Trump to withdraw from the deal with its rival Iran. While the comments were ambiguous, Iranian officials in the past have threatened to block the Strait of Hormuz, a major oil shipping route, in retaliation for any hostile USA action.
Left unmentioned by the Iranians and completely ignored by mainstream media is substantial evidence that the cause of the Iranian ire - Trump scrapping the nuclear deal fostered by the Barack Obama administration - was heavily skewed in favour of the Islamic republic, at the expense of American interests and security. Analysts had expected a 3.5 million-barrel draw.
"When there is consolidation in the market, there is also the expectation of an eventual price breakout in either direction".
Summer driving is having its typical effect on gas demand, which in turns increases the price at the pump.
U.S. motorists consume nearly 143 billion gallons of gasoline each year, according to the U.S. Energy Information Administration.
Analysis from Swiss investment bank UBS said spare capacity, the amount of extra oil a producer could put on the market in short order, was approachinga 10-year low. USA crude rose above US$75 a barrel for the first time since 2014.
The global benchmark slipped 23 cents, or 0.3%, to US$78.01 a barrel at 2:05pm in London.
U.S. West Texas Intermediate (WTI) futures were down 15 cents, or 0.2 percent, at $72.79.
The president´s repeated criticism of OPEC reflects his awareness that higher prices are already hitting a key section of his own electoral coalition. Jimmy Carter struggled with high gas prices, which had doubled since the Iranian revolution.
Motorists in California are now paying an average of $3.66 a gallon for regular and $3.92 for premium.
Trump might have good reason to worry about gasoline prices being used against him and his fellow Republicans. In December, the average price was just under $65. "Gas prices are at insane levels - fire Obama!" he tweeted on October 12, 2012. "It looks as though any additional supply increase from Gulf producers and Russian Federation will not be able to replace lost barrels from Libya, Iran and Venezuela". Obama accepted yearly reductions of 20 percent as "significant" enough to ramp up pressure on Iran.
Now that prices have rebounded from a low of $30 a barrel in January 2016 to about $75, OPEC and other exporters led by Russian Federation have agreed to slowly increase exports by what will effectively be 700,000 barrels a day now, with another half million barrels later in the year as sanctions on Iran take effect.
Trump, however, is not satisfied with either the current level of oil prices or the announced production increase.
"OPEC has not defined oil prices for the past 30 years, it is a financial market", said Ardebili.
Consultants Kpler estimated the kingdom's oil exports rose by 407,000 bpd in June to 7.62 million bpd compared with May.