China Join Hands to Counter OPEC’s Dominance in Asian Oil Market

President Donald Trump

"You can not place sanctions on two OPEC founder members and still blame OPEC for oil price volatility", he said, referring to his country and Venezuela. Despite the growth, the Saudi supply remains compliant with the deal.

U.S. President Donald Trump said on Wednesday oil prices were too high and blamed OPEC, renewing his attack even as prices fell on Wednesday amid expectation that the group may relax its output cuts later this month. The kingdom reported that it increased production in May to about 10 million barrels a day.

Speaking to reporters after a meeting with Russia's Energy Minister Alexander Novak, the minister of OPEC's biggest producer Saudi Arabia, said, "I think it's inevitable".

For oil, traders were focused more on the details of the latest monthly market report from the Organization of Petroleum Exporting Countries.

On Thursday morning, mixed comments from OPEC members cast further uncertainty over whether OPEC would maintain current production cuts or increase output over the course of the year, ahead of the June 22 OPEC meeting in Vienna.

Year-to-date at the end of May, crude oil prices are 30 per cent higher than in the same period last year, with ICE Brent averaging above $70/b for the first time since 2014.

With demand for oil strong, Morgan Stanley said the group's "production is likely to creep higher".

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Early in the year, with gas prices at service stations still relatively low, Trump suggested raising the country's gasoline tax that customers pay at service stations by 25 cents a gallon to fund road and highway repairs. Saudi Arabia, Iran's rival and the largest producer in OPEC, and Russian Federation, the world's largest producer and a party to the deal, have already increased supply.

With oil producers" cartel OPEC playing havoc with prices, India discussed with China the possibility of forming an "oil buyers club' that can negotiate better terms with sellers as well as getting more United States crude oil to Asia to cut dominance of the oil block. The ministers are gathering on June 20 as they debate an exit plan for the 2016 production cut deal, one of the key factors for pushing up oil prices.

For now, global oil demand growth is expected at 1.61 millions of barrels per day (mb/d) in the second half of the year, with total oil demand projected to breach the 100 mb/d level.

The potential for OPEC to boost production has raised concerns about the cartel's limited spare capacity, which could fall to as low as 2 million bpd. "As has been the case for some years, China and India together will contribute almost 50 per cent of global oil demand", the agency had said in a report.

The price for Brent has been more or less range-bound in the mid- to upper-$70 per barrel range, leaving consumer fuel prices elevated.

In the letter, the senators said a run-up in oil prices is "effectively a tax on every American family's discretionary budget" since the price of oil directly affects the price of gasoline.

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