President Donald Trump has repeatedly ordered OPEC to tamp down rising oil prices, but his Twitter barbs might be wasted on the world's oil cartel.
Analysts say OPEC's ability to drive down the cost of crude will be limited until it gets the opportunity to prove it can fill the gap left by falling Iranian exports. Shipments from OPEC's third largest producer are widely expected to fall by roughly 1 million barrels a day in the coming months as U.S. sanctions bite.
The upshot is that no matter what OPEC does, prices may keep bubbling up ahead of two major events: Trump's Nov. 4 deadline for oil buyers to stop importing Iranian crude and U.S. midterm elections two days later.
This week, OPEC and its allies rebuffed Trump's latest demand to hike output. The 15-nation cartel, Russia and several other producers opted instead to stick to their earlier decision to only gradually increase supply.
@realDonaldTrump: 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! We will remember. The OPEC monopoly must get prices down now!
On Tuesday, Trump told the UN General Assembly OPEC is "ripping off the rest of the world" by pushing up prices.
Trump blames OPEC for the rally because the cartel has been limiting its output since January 2017 in order to balance the market after a punishing oil price downturn. In June, OPEC and its allies agreed to increase output by about 1 million barrels day after cutting more than they intended.
However, prices have remained elevated since then and the national average gasoline price remains stuck near $2.85 per gallon as the market braces for the impact of sanctions on Iran.
On Monday, Brent crude, the international benchmark for oil prices, hit a nearly four-year high above $81 a barrel. The rally continued on Tuesday, with Brent topping $82 for the first time since November 2014.
The main driver is inaction by the oil producer alliance at its meeting Sunday, said John Kilduff, founding partner at Again Capital. OPEC issued a statement saying the producers would continue to monitor the market and meet customer demand, but offered no new details about how they would compensate for the lost Iranian barrels.
"They're being cagey once again about what their plans are," Kilduff said. "They give these answers to questions that are sort of a Rubik's Cube of dialogue."
A Wall Street Journal report that top exporter Saudi Arabia is running low on supplies of Arab light, its most popular crude grade, is also rattling the market, analysts said. The report suggested that a shortage of certain types of oil is already developing as Iranian exports start to decline.
Saudi Energy Minister Khalid al Falih told CNBC on Sunday that markets are "quite balanced today" and "there is plenty of supply to meet any customer that needs it."