Economic security

Saudi Arabia And Russia Fire Back At Trump On Oil Prices

Last week, Donald Trump attacked the Organization of Petroleum Exporting Countries (OPEC) in yet another extension of what has become a semi-regular war of words over oil prices.

...Rather than engaging Trump in a twitter battle, the Saudi oil minister, Khalid al-Falih, responded from Algeria on Sunday, after a meeting of the joint OPEC and non-OPEC ministerial monitoring committee. His response to President Trump’s call to increase oil production was an emphatic “not now.”

Specifically, al-Falih and OPEC’s message was that OPEC will listen to President Trump’s calls for increased oil production “if there is a need.” However, oil market fundamentals do not indicate that this need is apparent. In fact, Saudi Arabia said it knew of no refiner that needed oil and was not able to procure it.

Nevertheless, the oil markets and OPEC (and its non-OPEC partners like Russia) are operating in the shadow of President Trump’s tweet and his upcoming sanctions on Iran’s oil industry. Al-Falih rejected President Trump’s claim that OPEC is keeping oil prices elevated, but, at the same time, he told reporters that Saudi Arabia has 1.5 million barrels per day in additional spare capacity that it can bring online. He also explained that Aramco, the Saudi national oil company, is making the necessary preparations to access that spare capacity “within days and weeks” if needed.