A year ago Russia and OPEC decided crude prices were too low, so they agreed to artificially raise the price of crude by pumping 1.8 million barrels a day less. President Trump criticized them for the artificial move, but now he is getting revenge and is it ever sweet.
Both Russia and OPEC are having a difficult time selling their oil because US grades are better and actually cheaper. We are now flooding the market in Europe with oil. Oil and gas prices are also rising in the United States but not nearly as much as previous OPEC production cuts.
Ironically, the only way for them to boost sales is to bring the price of oil down and make it less profitable to drill in the United States.
In April US oil supplies to Europe are due to set a record at 550,000 barrels per day. Worse yet for OPEC and Russia is that US supplies are looking to rise with no end in sight. As long as the price of oil remains at 60 dollars or more it is profitable for us to export oil to Europe. OPEC is quickly becoming obsolete and they can no longer force price hikes up 100 dollars or more a barrel.
Trump just keeps winning.
Russia paired with the Organization of the Petroleum Exporting Countries last year in cutting oil output jointly by 1.8 million barrels per day (bpd), a deal they say has largely rebalanced the market and one that has helped elevate benchmark Brent prices <LCOc1> close to four-year highs.
Now, the relatively high prices brought about by that pact, coupled with surging U.S. output, are making it harder to sell Russian, Nigerian and other oil grades in Europe, traders said.
“U.S. oil is on offer everywhere,” said a trader with a Mediterranean refiner, who regularly buys Russian and Caspian Sea crude and has recently started purchasing U.S. oil. “It puts local grades under a lot of pressure.”
U.S. oil output is expected to hit 10.7 million bpd this year, rivaling that of top producers Russia and Saudi Arabia.
In April, U.S. supplies to Europe are set to reach an all-time high of roughly 550,000 bpd (around 2.2 million tonnes), according to the Thomson Reuters Eikon trade flows monitor.