Rabat - US President Donald Trump tweeted this week on Wednesday that the Organization of Petroleum Exporting Countries (OPEC) is “driving [fuel] prices high” and asked them to “REDUCE PRICING NOW.”
Rabat – US President Donald Trump tweeted this week on Wednesday that the Organization of Petroleum Exporting Countries (OPEC) is “driving [fuel] prices high” and asked them to “REDUCE PRICING NOW.”
The US President used his usual American foreign policy card, threatening to withdraw American support from “those countries” that are “manipulating” oil prices.
The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!
— Donald J. Trump (@realDonaldTrump) 4 juillet 2018
He said that the US is protecting many OPEC countries for “very little.” Suggesting that OPEC countries should produce more crude oil to increase supply and lower prices if they want to keep America’s strategic partnership, he said: “This must be a two-way street.”
Oil prices have risen in the past 12 months to a peak in late June and early July. OPEC members agreed June 23 to increase crude oil output by pumping 1 million barrels more daily, but it is still unclear how much of the oil produced would ease off prices in a period—the northern hemisphere’s summer—generally associated with high oil demand.
Saudi Arabia obliges
Following Trump’s OPEC complaint, Saudi Arabia, the biggest crude oil exporter, assured Trump they could increase oil production and ensure price stability in the global market, according to Reuters.
Aramco, Saudi Arabia’s state-run crude oil company, has reportedly announced sizable cuts for its August prices, reflecting the Gulf kingdom’s promise to its American ally to help stabilize the global oil market.
But while some have interpreted the Saudi move as a traditional Saudi card to always scramble to soothe American frustration and oblige to US demands, other reports have suggested that Riyadh’s move is the result of deep political calculations: step in to stabilize oil prices and compel the US to adopt tougher measures on Iran.
Saudi cooperation not enough, Iran toughens stance
But in the current market where several OPEC countries have reduced production capabilities due to internal political turmoil—Libya and Venezuela are cases in point—it is uncertain whether Saudi Arabia can sustainably fill Iran’s position.
Although Saudi Arabia is traditionally known for indirectly dictating most OPEC decisions, it is doubtful whether the Gulf state will have similar clout in current circumstances.
Because many OPEC countries are facing domestic troubles, the general expectation is that Iran, which is the fifth largest crude oil exporter, has a larger and increasingly discernible impact on how fuel prices behave in coming months.
Trump’s policy of economic sanctions on Iran has been accused by some bankers and energy experts as the primary factor in the market’s current level of high and unstable prices, CNBC recently reported.
Hossein Kazempour, Iran’s OPEC Governor, thinks prices are rising because of Trump’s tweets. Speaking yesterday in reaction to President Trump’s series of tweets about OPEC’s fuel prices, the Iranian official accused the U.S president of driving oil prices up with his tweets. “Please stop it,” Kazempour said.
“You impose sanctions on major producers, founders of OPEC, and yet you are asking them to reduce the prices?! Since when did you start ordering OPEC! Your tweets have driven the prices up by at least $10 per barrel. Please stop it; otherwise it will go even higher.”
Later speaking to Reuters, the Iranian declared that oil prices will rise to USD 100, and it will all be Trump’s “fault.”
“The responsibility of paying unnecessary prices for oil by all consumers of the whole world, especially in U.S. gas stations, is solely upon [Trump’s] shoulders and the price of over $100 per barrel is yet to come.”