In November 2018, Donald Trump tweeted: “Oil prices getting lower … a tax cut for America and the world! Enjoy! $54 … Thank you to Saudi Arabia.”
Five months on, with oil prices more than $70, Trump will be in a less celebratory mood as Opec’s oil ministers and their allies gather in Jeddah on Friday, without Iran. The main agenda item will be the implications for oil of three interconnected American foreign policy crises – in Venezuela, Iran, and Libya. Together these crises, being played out simultaneously, have the potential to scrub as much as 3.5m barrels of oil per day from the markets.
Rarely has there been a moment when a US foreign policy has had so much potential to cause such dislocation to oil markets, and as a result to hand so much market power to America’s Gulf allies to exploit that belligerence.
The energy ministers will be in the enviable position of being able to survey both projected rising oil demand for the remainder of the year, just as US foreign policy forces a contraction in supply.
The prospect is that the price of oil – which has already risen by 40% this year to more than $72 a barrel – could go much higher.
For Saudi Arabia, needing an oil price greater than $80 a barrel (and in the range of $85–$87 for the current year) in order to balance its budget, this is a welcome gift.
via The Guardian