Oil falls amid Trump's renewed call for OPEC to cut prices
Kyiv • UNN
Brent crude oil drops to $77.97 after Trump calls on OPEC to cut prices to weaken Russia. Trump threatens sanctions and offers to meet with Putin to discuss the war in Ukraine.
Oil fell in price on Monday after US President Trump called on OPEC to cut prices after announcing large-scale measures to increase US oil and gas production in his first week in office, UNN reports citing Reuters.
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Brent crude futures fell 53 cents, or 0.68%, to $77.97 per barrel by 04:30 GMT (06:30 Kyiv time) after rising 21 cents on Friday.
US West Texas Intermediate crude was at $74.16 per barrel, down 50 cents, or 0.67%.
Trump on Friday reiterated his call for the Organization of the Petroleum Exporting Countries to lower oil prices to hurt the finances of oil-rich Russia and help end the war in Ukraine, the newspaper writes.
"One way to stop this quickly is for OPEC to stop making so much money and bring down oil prices... This war will stop immediately," Trump said.
Trump also threatened to hit Russia "and other participating countries" with taxes, duties, and sanctions if an agreement to end the war in Ukraine is not reached soon.
Russian dictator Vladimir Putin said on Friday that he and Trump should meet to discuss the war in Ukraine and energy prices.
"They are preparing for negotiations," said John Driscoll of Singapore-based consultancy JTD Energy, adding that this is creating volatility in the oil markets.
He added that oil markets are likely to be slightly skewed to the downside due to Trump's policy of increasing US production as he seeks to secure overseas markets for US oil.
"He's going to want to win back some of OPEC's market share, so in that sense, he's kind of a competitor," Driscoll said.
However, OPEC and its allies, including Russia, have not yet responded to Trump's call, and OPEC+ delegates pointed to an existing plan to start increasing oil production in April.
Both indicators declined for the first time in five weeks last week, as fears of sanctions against Russia that could disrupt supplies eased.
Goldman Sachs analysts said they do not expect a serious blow to Russian production, as higher freight rates stimulate a greater supply of non-sanctioned vessels to carry Russian crude, and a deepening discount on the affected Russian ESPO grade attracts price-sensitive buyers.
"Since the ultimate goal of the sanctions is to reduce revenues from Russian oil, we assume that Western policymakers will prioritize maximizing discounts on Russian barrels rather than reducing Russian volumes," the analysts said in their note.
Nevertheless, JP Morgan analysts said that some risk premium is justified, given that the sanctions affect almost 20% of Aframax's global fleet.
"The use of sanctions against the Russian energy sector as leverage in future negotiations could go in either direction, indicating that a zero risk premium is inappropriate," they added in the note.
On the other hand, the United States quickly canceled plans to impose sanctions and tariffs on Colombia after the American country agreed to accept deported migrants from the United States, the White House said in a statement on Sunday evening.
The sanctions could disrupt oil supplies - last year, Colombia sent about 41% of its maritime oil exports to the United States, according to analyst firm Kpler.
