Oil falls after Trump calls for price cuts to put pressure on Russia
27 January 10:14
On Monday, oil prices declined after US President Donald Trump called on the Organization of the Petroleum Exporting Countries (OPEC) to reduce the cost of black gold. His statements came amid the announcement of a number of measures aimed at increasing oil and gas production in the United States in the first days of his new cadence, Komersant ukrainskyi reports with reference to Reuters.
Thus, futures for Brent crude oil fell by 35 cents (0.45%) to $78.15 per barrel as of 09:26 Kyiv time, after rising by 21 cents on Friday. The price of US West Texas Intermediate (WTI ) fell by 40 cents (0.54%) to $74.26 per barrel.
Nevertheless, oil prices corrected some of their losses after the US administration announced the cancellation of planned sanctions and tariffs against Colombia. As the White House said on Sunday evening, this decision was made possible after Colombia agreed to accept deported migrants from the United States. The sanctions could affect oil supplies, as in 2024, about 41% of Colombia’s maritime oil exports went to the United States, according to analysts at Kpler.
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Trump’s pressure on OPEC and Russia
On Friday, Trump again called on OPEC to cut oil prices to deal a financial blow to Russia and help end the war in Ukraine.
“One of the ways to stop the war quickly is to stop making so much money on oil and lower its price. The war will stop instantly,”
– Trump said.
In addition, he threatened Russia and other partner countries with the possible introduction of taxes, tariffs and sanctions if an agreement to end the war in Ukraine is not concluded soon.
In response, Russian President Vladimir Putin offered to meet with Trump to discuss the war and energy issues.
“This is a kind of positioning for negotiations,”
– commented John Driscoll, an analyst at JTD Energy, a Singapore-based consulting company.
He noted that such statements cause fluctuations in the oil markets.
Production and the market
Trump, seeking to strengthen the US position in the energy markets, is contributing to an increase in domestic oil production, which puts additional pressure on OPEC.
“He’s going to try to take OPEC’s market share, and in that sense, he’s a competitor,”
– Driscoll says.
Nevertheless, OPEC and its allies, including Russia, have not yet responded to Trump’s calls. Members of the OPEC group (including Russia) have emphasized that there is already a plan to gradually increase oil production from April.
Last week, both major oil indicators showed the first decline in five weeks as fears of sanctions against Russia began to ease.
Goldman Sachs experts predict that there will be no significant decline in Russian production, as high freight rates encourage the use of unauthorized vessels to transport Russian oil. The increased discount on ESPO crude also attracts price-sensitive buyers.
“Since the main goal of the sanctions is to reduce Russia’s oil revenues, Western politicians are likely to prioritize maximizing discounts on Russian oil rather than reducing its exports,”
– analysts said.
At the same time, JP Morgan notes that a certain risk premium is justified, as about 20% of the global fleet of Aframax tankers is under sanctions.
“The imposition of sanctions against the Russian energy sector as a lever in future negotiations could have unpredictable consequences, so the risk should not be completely ignored,”
– they said in their note.