President Donald Trump, who has long been a critic of high oil prices, said Saturday that he asked Saudi Arabia to increase its oil production in order to reduce prices in the global oil market.
“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!” Trump wrote on his Twitter account.
While Venezuela’s oil output has been in steep decline, the US bringing back sanctions on Iran is seen as the real reason behind oil prices posting massive gains this week.
After the US State Department on Tuesday urged allies and companies to stop buying crude oil from Iran by 4 November, international benchmark Brent crude gained 6.5 per cent and American benchmark West Texas Intermediate jumped 9.3 per cent between Tuesday and Friday.
Trump had blamed the Organization of Petroleum Exporting Countries (OPEC) for keeping oil prices high in the past while he was a businessman, and has recently reiterated his criticism against the cartel.
“Oil prices are too high, OPEC is at it again. Not good!” Trump wrote two weeks ago. He tweeted in April: “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!”
Although high oil prices benefit the US shale oil producers to ramp up their output and increase their revenues, Trump is also believed to prefer keeping prices low for American consumers at pumping stations before the mid-term elections in November.
It is yet unknown whether the Saudis, the world’s biggest crude exporter and OPEC’s heavyweight, will actually commit to Trump’s request in the short-term without consulting the cartel and Russia first.
Last week, OPEC-led Saudi Arabia and non-OPEC member Russia agreed to boost crude production by a total of 1 million barrels per day (bpd) for the remaining of the year.
While analysts say the Kingdom can ramp up its output by 500,000 bpd before the end of the year, an increase of 2 million bpd from Riyadh could cause sudden disruption in global oil market, loss of investment, and distrust towards the Kingdom from fellow cartel members and Russia.