Once again, an American president has begged, cajoled or hectored the Saudis and OPEC to produce more oil to keep prices low.
The latest request/demand from President Trump came Monday:
Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!
— Donald J. Trump (@realDonaldTrump) November 12, 2018
In April he accused OPEC of rigging the market:
Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!
— Donald J. Trump (@realDonaldTrump) April 20, 2018
In June he struck a more congenial tone for his request:
Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!
— Donald J. Trump (@realDonaldTrump) June 30, 2018
Saudi Arabia was forced to pump more oil to make up for the shortfall because of strife in oil-rich Venezuela, and a slowdown in Iranian export following the imposition of U.S. sanctions.
But the Saudis have indicated that it will soon slow the spigot. Because of a worldwide glut that has sent prices plummeting in just a month. On Oct. 15 the price of Brent crude, the international benchmark, stood at $81.41; on Tuesday it fell almost $5 — the steepest one-day drop in more than three years — to close at just over $65.
Many media reports attributed the drop to Trump’s latest tweet, but also this week, OPEC released a 2019 forecast that calls for slowing world demand, combined with increased production from non-member nations like Russia. To combat the oversupply, the 15-nation cartel is likely to vote to slash production by half a million barrels a day when it meets in Vienna on Dec. 6. More cuts could follow. So the Saudis seem unmoved by Trump’s tweet.
That will, in turn, shrink the supply glut and send prices upward, as has happened over and over again.
That glut is “temporary” anyway, former Shell Oil president (and Fuel Freedom director and advisor) John Hofmeister told Fox Business on Monday:
The U.S. allowed eight countries to continue buying Iranian oil, but those waivers are meant to expire. Hofmeister said he doesn’t think “we can really sustain this low price,” and predicted “equilibrium” in the oil market will mean a return to $80 oil.
Even though the U.S. is drilling a record amount of oil — more than 11 million barrels a day — we’re still dependent on OPEC and its most productive member, Saudi Arabia, to sell us oil so we can meet our 20-million-barrel-a-day demand. Since we can’t drill our way out of our oil dependence, Saudi Arabia is just as vital to our national security needs as ever. And it will always be, as long as we virtually depend on petroleum alone— that’s 92 percent market share, if you’re counting—for transportation fuel.
It’s why one president after another, dating to Richard Nixon during the 1973-74 oil crisis, has gone begging to the kingdom, figuratively and sometimes literally bowing at the feet of kings and princes, just to keep the oil flowing.
So expect more requests, both polite to petulant, because our addiction to oil isn’t going to be alleviated until we get serious about producing our own alternative fuels for cars and trucks.