Oil prices fall as Saudi, Russian output rises

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Oil prices have gained more than 3 percent since OPEC and allies agreed on June 22 to raise output to meet production caps set in 2016.

REUTERS/Jonathan ErnstSaudi Arabia's King Salman bin Abdulaziz Al Saud (L) receives US President Donald Trump for the Arab Islamic American Summit in Riyadh, Saudi Arabia May 21, 2017.

Iran's OPEC governor, Hossein Kazempour Ardebili, accused the United States and Saudi Arabia of trying to push up oil prices and said both countries are acting against the foundation of OPEC.

Saudi Arabia is said to have spare capacity of 2 million barrels per day, but it's not clear whether that much could be available immediately.

Saudi Press Agency reported that both leaders also discussed "efforts by the oil-producing countries to compensate for any potential shortage in supplies".

"The Trump support base is probably the part of the US electorate that will be the most sensitive to an increase in USA gasoline prices", Halff said.

In response to the recent comments, Robbie Diamond, SAFE's CEO and President, said in a statement: "Asking the cartel to increase output is like trying to put a Band-Aid on a broken system that shouldn't even exist in the first place". The kingdom, its Gulf allies and Russian Federation indicated that they will lift production by about 1 million barrels per day (bpd) to offset losses from Venezuela and Iran, but not more.

"We'll need more oil down the road and there'll be nowhere to get it", said Flynn, of the Price Futures Group.

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Traders have also been watching USA oil production C-OUT-T-EIA, which has surged by 30 percent over the last two years to 10.9 million bpd, absorbing some of the recent disruptions.

Saudi Arabia, which has been pumping about 10 million barrels per day, holds the largest spare capacity in the world and is the only country that can add substantial supply to the market.

However, fears that Trump had persuaded the Saudis to up production were stoked by a tweet which send oil markets tumbling.

"A fall in the price per barrel won't serve the interests of the big oil producers", Kaddour stressed. Rising gasoline prices could create a political headache for Trump before November mid-term congressional elections by offsetting Republican claims that his tax cuts and rollbacks of federal regulations have helped boost the USA economy.

"Recurring salvos in the trade war and falling asset prices raise the question of how much tariffs could damage the global economy, United States bank JP Morgan said in a note".

China, India, Japan, and South Korea are the top customers of Iranian crude.

Also earlier on June, US officials visited Japan to urge Tokyo to find an alternative oil supplier to Iran.

"In this battle", he said, "any country that tries to take Iran's place on the oil market will be guilty of treason against Iran. and surely one day it will pay the price of this treason".