Oil prices climb on tightening U.S. market

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Trump's administration has been a firm supporter of Saudi Arabia, signing a $110 billion defense deal during his first full year in office.

The potential trade war between the United States and China comes amid a tight oil market.

The US is producing more oil than it has ever done, though it may be reaching its maximum capacity.

After all, the more oil goes up in price, the more expensive gasoline gets.

That means there's a shrinking buffer to protect against the shocks like the eventual loss of Iranian oil or a hurricane in the U.S. Gulf of Mexico.

"If they want to stop Iranian oil exports, we will not allow any oil shipment to pass through the Strait of Hormuz", Ismail Kowsari was quoted as saying.

"On China, India - yes, certainly".

Foreign ministers from the five remaining signatories of a nuclear deal between Tehran and world powers will meet Iranian officials in the Austrian capital to discuss how to keep the accord alive after the US withdrawal from the pact.

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The rally appears to be a "short covering situation - we were down nearly 2 percent yesterday", said Yawger.

Oil was mixed on Thursday, with USA crude slipping and Brent futures little changed after data showed an unexpected build in U.S. crude oil stockpiles.

With threats by U.S. President Donald trump to punish any nation that purchases Iranian oil after November 1, 2018, Tehran is eager to make what revenue it can from the 2 million b/d it now exports while prices hold at their three and half year high.

This would already take it to record levels but Trump's suggestion of raising production to two million barrels per day would stretch Saudi Arabia to its absolute limit. Jimmy Carter struggled with high gas prices, which had doubled since the Iranian revolution. "He has agreed", Trump tweeted on June 30. Weekend discussions with Saudi Arabia, the de facto leader of OPEC, led to pledges from Riyadh to ensure the market was stable given lingering concerns about supply deficits.

"Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction (sic) in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference..." That represents about 2.5 percent of the global oil consumption, but crude oil prices have always been sensitive to pressure on a small portion of the overall market because consumers have trouble doing without gasoline or diesel.

The Saudis have reported to OPEC that they had pumped 10.488 million bpd in June, up by 458,000 bpd from their self-reported figure for May, OPEC sources told Reuters. More so, ongoing supply disruptions in Libya, Canada and Venezuela also help keep the prices near multi-year peaks.

Adding to the constraints is the short-term shutdown off Suncor-majority owned Syncrude until at least the end of July due to a tripped power transformer.

Mr. Trump tweeted Wednesday: "The OPEC Monopoly must remember that gas prices are up & they are doing little to help".

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