US president Donald Trump hoped to create economic pressure on the citizens of Venezuela and Iran by passing sanctions that would damage their oil market, among others.
Now that Trump’s sanctions have increased the price of oil, some OPEC member nations want to increase production in order to compensate for the loss of supply in the market from Iran and Venezuela to get a handle on the price of oil, which is on the rise.
However, in order to push through an agreement to increase production, OPEC needs unanimous agreement amongst its members.
However, the oil producing nations, and OPEC members of Venezuela and Iran, who are subjects of Trump’s economic sanctions, together with Iraq, are refusing to abide by any agreement to increase oil production for this purpose.
Tasnim News Agency reports:
TEHRAN (Tasnim) – Iran’s oil minister said problems in the oil market were political and not the result of a supply and demand imbalance.
“The current problem in the oil market is the result of political tension caused by the American president, not supply and demand imbalance,” Bijan Zangeneh said on Tuesday before his departure to the OPEC summit, Shana news agency reported.
Recently, Hossein Kazempour Ardebili, Iran’s OPEC governor, said Venezuela and Iraq will join Iran in blocking a proposal to increase oil production that’s backed by Saudi Arabia and Russia when OPEC and its allies meet in Vienna this week.
“Three OPEC founders are going to stop it,” Kazempour Ardebili said in comments to Bloomberg on Sunday.
“If the Kingdom of Saudi Arabia and Russia want to increase production, this requires unanimity. If the two want to act alone, that’s a breach of the cooperation agreement.”
OPEC and its allies could consider a production increase of as much as 1.5 million barrels a day, Russian Energy Minister Alexander Novak said on Thursday.
That would be enough to offset the supply losses from Venezuela and Iran foreseen by the International Energy Agency. Saudi Arabia has been discussing different scenarios that would raise production by between 500,000 and 1 million barrels a day, according to people familiar with the matter.
The alliance is also facing pressure from outside. US President Donald Trump has continued to criticize the Organization of Petroleum Exporting Countries on his Twitter account. Worried about the impact of gasoline prices on mid-term elections, the Trump administration is lobbying hard for a surge in production.
“We call upon our brothers in OPEC and Russia that we do not need to appease Trump, who sanctions two OPEC founders and also Russia,” Kazempour Ardebili said.
“We are sovereign nations driven by our own responsibilities and values. The whole world has to stand against these arrogant attitudes — and will.”
Therefore, Iran, Iraq, and Venezuela are, in effect, pushing the effects of Trump’s sanctions back onto America, which will continue to realize the costs of Trump’s sanctions through increased oil prices.
Trump wanted to make a deal that Iran and Venezuela couldn’t refuse, but now that it is Iran and Venezuela’s turn, they intend to make Trump such a deal, by holding the oil supply hostage to Trump’s economic sanctions. Apparently, the effects of Trump’s sanctions will be visited upon Americans, as well, and as long as Trump intends to stand by this behaviour, he can expect oil prices to reflect it.