- Oil prices fell more than 1% on Friday.
- OPEC may boost output to try to counter a supply squeeze from US sanctions against Iran.
- Watch oil trade in real time here.
Oil prices fell Friday amid reports OPEC is considering boosting coordinated output levels ahead of US sanctions against Tehran, which will effectively cut off Iranian production for much of the world.
West Texas Intermediate crude oil fell below $70 a barrel and Brent shed more than 1% after Reuters reported OPEC and other supply-cutting countries led by Russia are discussing raising production by 500,000 barrels per day at a Sunday meeting in Algeria.
Following President Donald Trump’s decision in May to withdraw the US from the Iran nuclear deal, the State Department earlier this year called on buyers to stop importing barrels from the Islamic Republic by November.
The oil sanctions could make maintaining global supply “very challenging,” the International Energy Agency warned last month. Iran is the third-largest producer within OPEC.
The Trump administration has looked to Middle Eastern producers to pick up the slack left by its policy, with Saudi Arabia agreeing earlier this year to increase its oil output by a “measurable” amount. OPEC has already boosted production once this year, deciding in June to reduce compliance with coordinated supply constraints.
Still, Trump has continued to take aim at OPEC for energy costs, demanding Thursday that the cartel “get prices down now!”
“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!” he tweeted.
Analysts remain skeptical OPEC and Russia will be able to offset the expected supply squeeze. Stewart Glickman, an energy equity analyst at CFRA Research, still sees the potential for upward pressure on crude oil prices in the near-term.
“We think Saudi Arabia, which has the lion’s share of global spare capacity, will be hesitant to boost production meaningfully higher despite falling Iranian exports,” Glickman said.
It remains unclear if the US will grant sanction waivers to countries in attempt to avoid supply shocks. Trump administration officials have said they might look at requests on a case-by-case basis, while also maintaining that the goal is to cut Iran’s exports to zero.