Sept. 8 (UPI) -- The value of the U.S. dollar is having more of an impact on oil markets than the OPEC effort to trim production, the head of Russian oil company Rosneft said.
The value of the greenback has moved steadily lower when weighed against the euro since U.S. President Donald Trump took office. A briefing from currency trader XE said Friday the dollar is under pressure from hurricane threats to the U.S. mainland and geopolitical tensions with North Korea, U.S. economic policy notwithstanding.
The value of the dollar influences internationally traded commodities like gold and crude oil. When the value falls, commodity prices increase because more dollars are required to purchase the same quantity as when the value was higher.
Igor Sechin, the head of Russian oil producer Rosneft, said a decline in the value of the U.S. dollar was having a greater market impact than the effort by the Organization of Petroleum Exporting Countries to balance the market with coordinated production declines. Russia is a party to the effort and is cutting the most among non-OPEC members.
"The Americans are supporting their shale producers through the dollar's devaluation. I think that the effect of the dollar's devaluation is stronger than the OPEC deal," he told Russian news agency TASS.
The value of the U.S. currency has moved lower for much of the year. The price for Brent crude oil, meanwhile, is about 10 percent higher than on this date in 2016 at $54.68 per barrel.
U.S. shale oil operators, meanwhile, have become more efficient and able to produce more despite the historic low for crude oil prices, which were above $100 per barrel three years ago. The four-week average for total U.S. crude oil production is 9.3 million barrels per day, up 9.5 percent from the same period last year.
The value of the dollar would influence the market price and U.S. exports over the same four-week period are up 12.3 percent. Brent crude oil, the global benchmark for the price of oil, holds a $5.80 per barrel premium over West Texas Intermediate, the U.S. benchmark for the price of oil.
Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in response to emailed questions, that Trump supported a strong dollar on the campaign trail, but appears to favor a weaker currency as president in order to support U.S. exports.
"The Russian are probably not happy the dollar is weak and giving us that edge in exports," he said.
Flynn added, however, that Sechin's case "is very thin."
When it was implemented in January, the OPEC-led effort was seen as helping to establish a $50 per barrel floor under the price of Brent.
Sechin added that not all of the OPEC members are participating in the effort. Libya and Nigeria are exempt from the deal so they can steer oil revenue toward national security efforts. A pending initial public offering for the Saudi Arabian Oil Co., known also as Saudi Aramco, could be a major factor for the price of oil. The IPO would make the company more interested in pushing for a higher price of oil, he said.