OPEC and its Russia-led counterparts meet this weekend, as international oil prices flirt with multiyear highs, to gauge whether they need to boost output amid U.S. sanctions on Iran.
The discussions come at a tricky time for the cartel—just a few months before U.S. midterm elections, a time when oil prices take on outsize political importance in the country that burns more oil than any other. President Trump has already taken public aim at OPEC this year, blaming the cartel on Twitter for high oil prices, which boost pump prices. On Thursday morning, Mr. Trump fired off a fresh swipe, saying in a tweet, “The OPEC monopoly must get prices down now!”
The cartel has previously said it was responding to Mr. Trump and other world leaders, who in the spring had ratcheted up complaints about high prices. The group in June agreed to boost their collective output. The Organization of the Petroleum Exporting Countries meets again Sunday with big non-OPEC producers led by Russia in Algiers.
The additional supply helped damp prices in recent months. But they are back up again more recently. Brent, the international benchmark, temporarily breached $80 a barrel last week for the first time since May. Prices are hovering near highs not seen since early summer. Prices started the day up Thursday, trading at more than $79 a barrel, on the back of weekly U.S. government data showing crude inventories had fallen to a 3 1/2-year low last week.
OPEC members say they will be wary of pumping too much more oil. That hesitancy is also partly due to Washington. The Trump administration’s various trade disputes have at times roiled global stock markets, and knocked oil prices, amid worry the disputes might slow global economic growth.
Mr. Trump “is influencing both supply and demand” in oil markets, an OPEC official said. If prices are not to his liking, “I would expect another tweet” while producers meet in Algiers, this official said.
U.S. Energy Secretary Rick Perry met with his Saudi counterpart, Khalid al-Falih, early last week in Washington, and held a meeting with Russian Energy Minister Alexander Novak last Thursday in Moscow. In Moscow, Mr. Perry credited the two countries with having averted “a spike in oil price.”
A representative of the Department of Energy didn’t return a request for comment on the Algiers meeting. The White House’s press office couldn’t be reached.
OPEC and Russia are expected to discuss at the Sunday meeting whether the group needs to boost output, throttle back or keep output unchanged in coming months. The group isn’t expected to make a formal decision, though if ministers telegraph their thinking one way or the other, they could move oil prices. The group is also expected to discuss the contours of their future cooperation.
Saudi Arabia, as OPEC’s de facto leader, “has a very narrow needle to thread,” said Jason Bordoff, director of the Center on Global Energy Policy at New York’s Columbia University.
The Algiers meeting is the latest in a series in which OPEC and a group of non-OPEC producers, first among them Russia, have acted together to guide crude market prices. Two years ago, the two sides came together at a time when prices were low thanks to a flood of new oil from U.S. shale producers. U.S production, while still growing, is now facing challenges such as bottlenecked pipelines.
Saudi Arabia and Russia orchestrated cutbacks, which worked in boosting prices. In June, they loosened up again, agreeing to add about 600,000 barrels a day of crude to world markets.
A big factor then was the looming effect of new U.S. sanctions on Iran. The Trump administration reinstated tough limits on buying Iranian crude, threatening to bottle up output. The International Energy Agency estimates Iranian exports fell by 500,000 barrels a day between April and August.
At the Algiers meeting, oil ministers from Saudi Arabia, Russia and other countries will debate whether more is needed, though they won’t have to decide until a December summit. Both countries have boosted output beyond their promise in June, according to oil-production data. The Saudis increased output by 500,000 barrels a day in August, and Moscow has raised production by 250,000 barrels a day, compared with four months ago, the IEA reported last week.
Complicating the calculation are diverging estimates of just how much Iranian exports are falling short. Iran maintains it is exporting close to 2.1 million barrels a day, according to the country’s OPEC envoy, Hossein Kazempour, in an interview. This suggests little change in the past two months.
But the IEA said the Islamic republic exported just 1.9 million barrels a day in August, a decline of 500,000 barrels a day from April.
OPEC’s ability to fill the hole left by U.S. sanctions on Iran is not limitless. The group’s spare capacity—the amount of shut-in oil that could be brought online within 90 days—fell to 2.69 million barrels a day in August, a decline of 780,000 barrels a day since April, according to the IEA. Spare capacity acts as a sort of global shock absorber for unexpected supply disruptions.
“The global system [is] highly vulnerable to any further significant outage,” HSBC warned in a note Wednesday. “A $100 Brent [price] is not out of the question given the increasing lack of global spare capacity.”
—Summer Said contributed to this article.