& Tobago


Very usefull links


News links




Dow Jones

Oil price



Views and News






OPEC again faces choice between Trump's wrath and oil slump

Simon Dawson/Bloomberg

Crude Oil Plummets as President Trump Warns Against High Prices

Play video: Oil Buoyed by Drop in U.S. Stockpiles, Russia Commitment to Cuts

- U.S. president urged cartel to ‘relax' as oil price too high
- Saudi Arabia can't disregard pressure, says Rapidan's McNally

By Grant Smith / Bloomberg

Petroleumworld 02 27 2019

It's becoming a familiar choice for OPEC: risk the pain of an oil-price slump, or provoke the wrath of President Donald Trump.

After another warning on Twitter on Monday to avoid pushing crude higher, Saudi Arabia and its allies are again are faced with a dilemma: Maintain production cuts and defy a president who could enforce legislation that shakes the group to its foundations. Or do as he asks and risk a repeat of the price rout that battered their economies last year.

The Organization of Petroleum Exporting Countries had no official response to Trump's statement, but three oil officials from the Persian Gulf said the group has learned from its 2018 mistake, when heeding Trump's call to pump more crude created an oversupply.

“I think they will send this call straight to voicemail given the November experience, and the fact that this has all the hallmarks of a self-inflicted wound,” said Helima Croft, chief commodities strategist at RBC Capital Markets LLC in New York. “Trump has sanctioned two OPEC countries and is calling on OPEC now to dig him out of the hole he helped dig.”

The president has renewed his pressure on OPEC and its allies after they started a new round of output cuts last month. The group's supply reduction, plus U.S. sanctions on Venezuela and Iran, has contributed to a crude-price rally of more than 20 percent this year.

Trump has been quick to show his displeasure at rising prices. Last summer, when he urged the Saudis to open the taps while he imposed sanctions on Iran, the kingdom bowed to his wishes, boosting production within a few months to record levels.

The organization displayed a different response to Trump's subsequent request. On the eve of an OPEC meeting in December, Trump's call to keep production high was disregarded by the group and its allies, who announced an output cutback of 1.2 million barrels a day that they're now implementing.

Lessons Learned

Saudi Arabia may insist that, if the U.S. genuinely fears a supply shortage, it should tap its emergency supplies, according to Olivier Jakob, managing director at consultant Petromatrix GmbH in Zug, Switzerland.

“Saudi Arabia is probably going to call Trump's bluff and ask the U.S. to use its Strategic Petroleum Reserve instead,” said Jakob.

Crude Oil Plummets as President Trump Warns Against High Prices

Nonetheless, the price response on Monday showed that traders are seriously considering the Saudis may at least soften their output cuts. Brent crude futures, the global benchmark, tumbled 3.5 percent to $64.76 a barrel in London.

“We might see a less aggressive stance on supply cuts from the Saudis -- this might stop them from cutting deeper,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich.

The risk to OPEC comes in the form of the so-called No Oil Producing and Exporting Cartels Act , or NOPEC, a bill resurrected by U.S. legislators that would make the group subject to the Sherman antitrust law, used more than a century ago to break up John Rockefeller's Standard Oil Trust.

Congressional support for the bill intensified last year as oil prices neared a four-year high, and Trump publicly blasted OPEC. In the past, the White House has opposed the NOPEC legislation -- both George W. Bush and Barack Obama threatened to veto it. OPEC's concern now is that Trump may break with his predecessors.

“Recent history has shown that Saudi Arabia and OPEC cannot disregard pressure from President Trump,” said Bob McNally, president of Rapidan Energy Advisors LLC and a former oil official at the White House under President George W. Bush. “As crude prices edge back up toward politically sensitive levels in Washington, OPEC+ members will consider tempering cuts.”

OPEC's course of action will probably become clearer when key members of the group and its partners meet for a review of their accord in Baku, Azerbaijan, on March 18. The whole 24-nation coalition will gather in Vienna for a policy-setting meeting a month later.

Whatever they decide, there will be pitfalls, according to Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.

“There are no good choices,” said Weinberg.

— With assistance by Javier Blas


Original article



We invite you to join us as a sponsor.

Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.


Story by Grant Smith / Bloomberg from Bloomberg.

bloomberg.com 02 25 2019


We invite all our readers to share with us
their views and comments about this article.


Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95, '98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1



Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2019, Elio Ohep A. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2019, Petroleumworld ™  / Elio Ohep - All rights reserved



This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.