How Much Does The U.S. Spend On Defending Global Oil Supplies?

Crude prices are spiking

Crude prices are spiking

Oil extended gains near the highest level in nearly four years as banks and trading houses said prices may spike after OPEC and its allies rebuffed President Donald Trump's call to boost production.

OPEC leader, Saudi Arabia and its biggest oil-producer ally outside the group, Russia, on Sunday effectively rebuffed a demand from Trump for moves to cool the market. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 2.2% at $72.33 a barrel.

Falih said attending ministers "showed us that they have spare capacity that they are ready to deploy if there is demand for it, if it is required by any shortfall".

Also Sunday, OPEC released its World Oil Outlook 2040 report.

Trump has repeatedly called for a hike in production by countries other than Iran to reduce oil prices, which have partially recovered since the December 2016 agreement, to trade close to $80 per barrel in October.

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He also took the opportunity to remind Middle East allies that they would "not be safe for very long" without U.S. protection.

"We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!".

In contrast to the dramatic policy U-turn that Trump's tweets provoked earlier this year, Saudi Arabia, Russia and their allies signaled less urgency and stopped short of promising specific extra volumes of crude.

Oil prices have been rising since early 2017, when the Organization of the Petroleum Exporting Countries (OPEC) together with other suppliers including Russian Federation started withholding output to lift crude values.

Trump however, wants output increased by as much as two million barrels per day, as oil prices continue to rise in the U.S. amid high consumer demand.

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Saudi Arabia successfully negotiated limits on oil production 18 months ago in an effort to get oil prices higher and boost government coffers, which had suffered from an extended period of cheaper oil. Bank of America Merrill Lynch joined JPMorgan Chase & Co.in anticipating higher prices down the line - the former expects crude to reach $95 a barrel in the first half of next year.

Trump has criticized the producer cartel several times over what he claims is the deliberate inflation of oil prices.

They met in Algiers on Sunday to discuss global supply levels and USA sanctions on Iran. The kingdom had "limited spare capacity" to compensate for the loss of Iranian supplies, he said.

Meanwhile, U.S. crude inventories are forecast to have fallen for a sixth week, according to a Bloomberg survey of analysts before Energy Information Administration data due Wednesday.

The United States will increase tight oil production to 13.4 million bpd in 2023 from 7.4 million bpd in 2017, with total USA output reaching 20 million bpd, OPEC said. The US sanctions are expected to remove at least 1 million barrels of crude oil from the market per day.

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