Oil prices dropped yesterday, falling 97 cents to $73.17.
Oil’s uptick in recent weeks has brought the commodity to levels not seen since it started a rapid descent in November 2014 that culminated in a brief trip below $30 per barrel in February 2016.
And consequently, Fourth of July gasoline prices notched a four-year high, according to fuel-finding-app GasBuddy.
United States (U.S.) President Donald Trump reiterated his call for the Organisation of the Petroleum Exporting Countries (OPEC) that exerts significant influence over oil prices to take action to halt crude’s upward climb.
OPEC’s production limits, which were implemented and extended multiple times to help bolster prices, have contributed to oil’s rise. The group recently made plans to increase production in the coming months, but questions linger about whether it will happen.
“The OPEC monopoly must remember that gas prices are up and they are doing little to help. If anything, they are driving prices higher as the U.S. defends many of their members for very little $’s. This must be a two way street. While OPEC’s effect on oil prices remains notable, the commodity is also rising for other reasons,” Trump said Wednesday on Twitter.
For starters, Trump’s reimposition of sanctions on Iran after canceling President Barack Obama’s nuclear deal with that country has put upward pressure on the commodity, according to Mizuho Securities oil analyst Paul Sankey.
“The problem with strong enforcement of sanctions on Iran, offset by increases in Saudi production, is that it will take global spare oil production capacity to zero. “To us it is clear that harsh application of Iranian sanctions will very likely spiral oil prices higher,” Sankey wrote yesterday.
In addition, a supply outage in Libya is also contributing to petroleum’s spike, according to JBC Energy analysts.