Will oil prices hit $120 a barrel?

An aerial view of an Iranian floating oil export terminal in the Persian Gulf

An aerial view of an Iranian floating oil export terminal in the Persian Gulf

The president is right that oil prices are rising, and he's partly correct that OPEC is "doing little to help", insofar as OPEC isn't producing enough oil to cope up with market demand.

Washington's withdrawal from the landmark Iran nuclear deal was widely criticized across the world.

Oil futures are trading near three-year highs as disruptions in Canada and Libya, along with slumping production in Venezuela and a USA call for allies to stop buying from Iran, have overshadowed a pledge by OPEC and allies to add 1 million barrels a day.

The Trump administration has aggressively pressed Saudi Arabia to boost output and the Saudis have complied, promising to ramp up production by as much as 2-million barrels a day.

On Friday, Oil prices fell due to surging U.S. output and falling demand in China amid global tensions and a Saudi production increase.

After India-US relations soured over India's oil imports from Iran, Iran has put India in a spot of bother now.

OPEC and other producers including Russian Federation agreed last month to boost output by around a million barrels a day, reversing course after supply cuts that cleared a global glut and boosted prices. If Trump really wants to reduce oil prices in America, he should start there.

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The Organization of the Petroleum Exporting Countries and other countries agreed earlier this month to a modest increase in output to dampen a rally in oil prices, which recently hit a 3-1/2 year high.

Iran, OPEC's third-largest producer, is facing USA sanctions on its oil exports prompting some buyers to cut purchases.

"There was pressure from the South Korean government to halt purchases", said the source familiar with Iranian shipping arrangements.

Now, President Trump is threatening sanctions against any country that continues to do business with Iran.

Opec members agreed with Russian Federation and other oil-producing allies last month to raise output, despite Iran storming out of negotiations, with Saudi Arabia pledging a "measurable" supply boost but giving no specific numbers.

Last week, Bloomberg reported that "a complete shutdown of Iranian sales could push oil prices above $120 a barrel if Saudi Arabia can't keep up". "South Korea overall is lifting zero oil (from Iran) for July loading". "In contrast, we now project global oil supply and demand balances to remain in a structural deficit for most of the next six quarters", he wrote.

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