The prices of oil is nearing a high of three years, as it approaches $70 per barrel, and has been increasing since producers, both OPEC and non-OPEC, including Russian Federation, cut production in January of 2017 to end a worldwide oil glut and collapse in prices.
"It puts local grades under a lot of pressure", said a trader with a Mediterranean refiner, who regularly buys Russian and Caspian Sea crude, and has recently started purchasing the USA oil.
In addition, by May 12, the Trump administration must announce whether it will continue to waive nuclear-related sanctions on Iran's central bank and oil exports or start a process of snapping back these and other powerful economic sanctions on Tehran, thereby taking the USA out of the nuclear deal.
Iran's oil minister Bijan Zanganeh said there would be no need to extend a pact between the Organization of the Petroleum Exporting Countries and non-OPEC producers if oil prices strengthened, the ministry's official website SHANA reported.
TrackInsight data over the month to 19 April shows ETFs tracking oil prices have remained in outflows over the past month, as can be seen on the chart below, despite the strong jump in performance resulting from expectations that geopolitical turmoil will cause further falls in oil supply.
Soaring U.S. shale production has been a nagging concern for OPEC and its allies, but the group's key players appear to be more fixated on the immediate benefits of high crude prices .
Brent crude oil rose for a sixth day on Tuesday to hit its highest since November 2014 at over 75 dollars per barrel. Crude oil prices initially sold off following news that the United States had extended its deadline for sanctions against Rusal (a Russian aluminum producer).
Saudi Arabia's energy minister Khaled al-Faleh said earlier on Friday the global market has the capacity to absorb higher oil prices, drawing a swift reaction from President Trump, who accused OPEC of inflating prices.
On Friday, US President Donald Trump slammed Opec for artificially boosting prices. Currently, the U.S.is producing 10.54 million barrels compared to Russia's 11 million.
West Texas Intermediate crude for June delivery was down 8 cents to $68.30/bbl at 12:30 p.m. on the New York Mercantile Exchange.
"U.S. oil is on offer everywhere", according to a trader with a Mediterranean refiner who regularly buys Russian and Caspian Sea crude and has recently began buying US oil.
Now that the U.S.is the world's top oil producer, however, higher oil prices would have a mixed impact on the USA economy.
The Saudis argue that higher prices are justified because even when approaching $100 a barrel, there was little evidence of demand destruction.
Higher oil prices mean higher gas prices at the pump for US consumers, and with the high American driving season still ahead, gasoline prices are set to increase even more.