He said oil sector contracted by 1.6 per cent a year ago mainly because of the Opec mandate that saw the UAE cut its oil production by 150,000 barrels per day from an average of 3.09mbpd in Q4 2016 to an average of 2.89m in Q4 2017, representing a drop of almost 6.4 per cent. Iran also faces the backlash of sanctions on exports. United States producers will gain market shares, while OPEC will take advantage of the absence of Iranian oil to compensate for the excess production of some of its members.
Saudi Arabia's objective, revealed at the OPEC meeting in June, has been to stabilise production and prices around current levels.
In his bid to halt the flow of Iranian oil without raising prices, Trump has urged Saudi Arabia and other OPEC members to increase their output. Saudi Arabia's all-time record high output level stands at about 10.7 mb/d.
The commitment is likely to add 600,000-650,000 barrels per day to the market.
Iran exported more than 2.4 million barrels a day in May, according to the IEA.
Analysis from Swiss investment bank UBS said spare capacity, the amount of extra oil a producer could put on the market in short order, was approachinga 10-year low.
These cuts have been the greatest gift to shale. Venezuelan production has decreased day after day, reaching a 30 year low of only 1.5 million barrels per day.
"There are indications that Iranian oil exports have already begun dropping during the first half of June, mostly to Europe". If that happens, "Chinese demand would then shift to other suppliers".
OPEC and Russian Federation said in June they were willing to raise output to address concerns of supply shortages due to unplanned disruptions from Venezuela to Libya, and likely also to replace a potential fall in Iranian supplies due to US sanctions. The price of a barrel of oil has gone from $50 to around $75.
The big problem with OPEC is that when prices went up they became accustomed to an unjustified oil revenue and when they went down they faced huge deficits from unsustainable subsidies.
This comes in the light of increased pressure from the Trump administration on allies to stop funding to Iran.
The period of price manipulation was a failure.
The US President used his usual American foreign policy card, threatening to withdraw American support from "those countries" that are "manipulating" oil prices. But Obama never attacked OPEC or rebuked it on public!