Trump Tweets Hope For "Substantial Increase" After OPEC Agrees To Hike Oil Production By 700kb/d

Update 4: for those asking how long it would take Trump before he commented on the OPEC decision, the answer was about an hour, as moments ago Trump tweeted his third direct "message" to OPEC int he past 3 months, saying "Hope OPEC will increase output substantially. Need to keep prices down!"

Keep a close eye on the SPR, which will likely be tapped next.

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Update 3: Here is the final OPEC communique:

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Update 2: the deal is done and here are the headlines, which are as mostly reported previously - a 1 million "paper" production increase, which however will not be fully satisfied since many nations are already at their peak output, as OPEC nations comply with output quotas - with the exception of the "real" production increase, which according to the Nigeria energy minister will be 700kb/d while earlier reports had it at 600kb/d:

  • SAUDI OIL MIN: `WE HAVE AN AGREEMENT,' DECIDED ON 1M B/D HIKE
  • KACHIKWU SAYS OPEC SIDE TO ADD 700K B/D IN REAL BARRELS
  • SAUDI WILL BOOST OIL OUTPUT, MINISTER SAYS
  • OPEC COMMUNIQUE SAYS GROUP WILL STRIVE TO REACH 100% COMPLIANCE
  • DRAFT OPEC COMMUNIQUE SEEN BY BLOOMBERG DOESN'T GIVE NUMBERS
  • NIGERIA SAYS QUOTAS WERE NOT DISCUSSED IN OPEC MEETING
  • SAUDI MIN: OUTPUT HIKE DEPENDS ON WHICH NATIONS HAVE CAPACITY
  • SAUDI MINISTER: OUTPUT HIKE WILL BE `PROPORTIONAL' BY COUNTRY

And with the next full OPEC meeting scheduled for on Dec. 3, Bloomberg notes that ministers will hold a very important meeting of the Joint Ministerial Monitoring Committee in Algiers in September. That will be a chance to review the deal and make any adjustments.

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Update: It seems oil market traders suddenly woke up and spiked WTI back above $67 - its highest since June 1st - which will likely prompt an angry response from President Trump...

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What was expected to be a drawn-out affair, with Iran potentially resisting and even leading to the collapse of the cartel, moments ago OPEC reached a deal in principle to raise oil production by 1 million b/d on paper, and in reality by 600 kb/d as many of the OPEC nations are already tapped out and unable to produce more.

The deal is roughly what the committee had agreed to yesterday and is the plan pushed by Saudi Arabia all week.

And while details haven’t yet been formally announced, the deal would mean a return to 100% compliance with output quotas.

As Bloomberg notes, this is the deal traders have been waiting for:

The fear was that, if the meeting broke up in disarray, Saudi Arabia would simply open the taps and other producers would follow suit, unleashing far more supply than the market needed. What this deal does is to bring some order to the process of easing supply restraint.

Indeed, absent some last minute shock, Iran appears to have gone along with the majority and will comply with what is effectively A Saudi-Russian decision, prompted by Trump complaints for the cartel to produce more oil .

As Bloomberg further adds, any distribution of output increases among OPEC and non-OPEC members "is going to create winners and losers."

While the headline number is what will matter for oil prices, the relative gains and losses against their fellow members will also be important to the participants. That could mean ministers still have a way to go before they are finally done. But the fact that they have got as far as they have means that cohesion has, once again, proved paramount.

Brent crude edged toward $75 a barrel on the headlines, but has pared back a bit, whereas WTI was trading in the upper $66 range, not a big move from the recent range, suggesting that the outcome is largely as priced in.

Comments

shortonoil skbull44 Fri, 06/22/2018 - 09:55 Permalink

OPEC just announced a 600K boast in production and the price jumps a $1 barrel. It just goes to show how rigged the market has become. With additional peripheral economies now collapsing daily the west will be lucky to have more than a few years before it is passing around Venezuelan composed dog stew recipes. The oil age is ending, and every vital resource from fresh water to top soil has reached its critical state. The belief that things can improve has become no more than a desperate delusional.

In reply to by skbull44

Hefalonicle LordWillingly Fri, 06/22/2018 - 08:30 Permalink

How can you spin this as a negative for trump? What, US fracking takes a hit but we all suffer because oil prices drop?

This was a decision by a group that USA has no involvement in regarding how to protect and salvage their own economic mess.

It's not always about the USA.

 

Also, USA bombing Yemen into non-existence for really no reason other than we don't like Iran, so that is some pretty fucked up shit too.

In reply to by LordWillingly

gwar5 Fri, 06/22/2018 - 08:27 Permalink

That's plenty OK, helps summer demand. Lets Make Opec Great Again too while we're at it. 

I remember the gas rationing days of 1973 when we were told by .gov that we would absolutely run out of oil by the year 2000 and everybody could only get gas on odd/even days.

...Those lying sacks of shit.

Son of Captain Nemo Fri, 06/22/2018 - 08:40 Permalink

Hey... You gotta make "Andre Flushtron's" job legit when you spend $1,000 an hour lawyers to spring him (https://www.zerohedge.com/news/2018-04-25/ex-ubs-metals-trader-found-no…) and hold the price of PHYSICAL Gold and silver down more then 500 times less then they're both worth!...

Suffice it to say oil, gas gold and silver will stay "RIGGED" until Russia, China and Iran bust the biggest moves by walking away from OPEC COMPLETELY, and starting their own mutual oil, gas and PM "bourse" along with a major PR walkout of the United Nations!...

ONLY WAY this will ever get fixed at this stage!!!

Chief Joesph Fri, 06/22/2018 - 08:43 Permalink

Wonder if Iran agreed to the increase production, was without getting the Saudis to get off the dollar?  Or, whether the Saudis agreed to get off the dollar secretly to get Iran to agree to the production levels?  That was Iran's real bargaining chip.