OPEC Member Complains U.S. President is Driving Up Prices
It’s not often that an OPEC producer accuses the U.S. of driving up oil prices.
But that’s exactly what Iran Oil Minister Bijan Namdar Zanganeh said on state television Thursday. Two days after Donald J. Trump decided to withdraw from the Iran nuclear agreement, Zanganeh said the U.S. president is engaging in “shenanigans” in the oil market — and that he’s cut a deal with some members of the Organization of Petroleum Exporting Countries to keep production down and prices high.
Higher oil prices boost the U.S. economy and employment and increase taxes the federal government collects, according to Zanganeh. Iran has become a new voice for moderation in oil markets, with the minister saying Sunday that a “suitable price” is $60 to $65/bbl — below the reported $80 that the Saudis are seeking.
Oil prices have climbed to a three-year high as the market prepares for Iranian exports to fall. Bank of America Corp. said Thursday that $100/bbl for Brent crude, the international benchmark, is a possibility next year.
Meanwhile, Saudi Arabia — which has long called for sanctions to be re-imposed on Iran — has pledged to “mitigate” the effects of the sanctions. That may put in jeopardy an existing agreement among OPEC and non-OPEC nations to curb output.
“There is a good chance the current OPEC deal will end by end-2018, if not before,” said Ed Morse, head of commodities research at Citigroup Inc. in New York.
As far as boosting the U.S. economy, the old rule of thumb was that a sustained $10/bbl rise in oil prices would shave about 0.3% off of U.S. GDP the following year. Now, says Mark Zandi, chief economist at Moody’s Analytics, the hit is around 0.1%.