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
This week, a tweet by President Donald Trump claimed he had persuaded Saudi Arabia to up their oil production by a couple of million barrels to help stabilize petrol prices in the country.
However, the White House refuted these claims and clarified that this was, in fact, not the case.
The White House statement confirmed that Saudi Arabia had informed Trump that the country has extra production capacity. However, the decision to utilize that excess capacity is not KSA’s alone. That decision is taken jointly by the Organization of the Petroleum Exporting Countries (OPEC), and not at the behest of the American President.
This is perhaps why Saudi King Salman bin Abdulaziz said that the country will use the production capacity “prudently and “if and when necessary to ensure market balance and stability, and in coordination with its producer partners, to respond to any eventuality.”
When news broke, the OPEC governor of Iran Hossein Kazimpour Ardebili said that increasing oil production so drastically above the quota assigned by OPEC is tantamount to leaving the organization altogether. The Wall Street Journal reported that the state-run Saudi Press Agency confirmed that bin Abdulaziz and Trump did have a conversation about stabilizing the oil market.
However, the agency did not say anything about an output rise as claimed by the president. "During the call, the two leaders stressed the need to make efforts to maintain the stability of oil markets and the growth of the global economy," SPA said.
It is now being reported that Saudi Arabia may increase its oil production by 1 million barrels after OPEC talks last week, and not because of POTUS’ persuasion.
Whatever may have transpired between the USA and the conservative kingdom, it’s undeniable that petrol prices are on the rise in the USA due to decreased production.
Since United States pulled out of the nuclear deal between Tehran and world powers, the Trump administration has pushed allies to end all oil purchases from Iran. The constant turbulence in Venezuela and Libya over the country’s oil infrastructure also plays a huge part in the increased oil prices.
For the week ending June 25, the average petrol prices increased by 55 cents from last year this time. With the GOP elections inching closer, it is no wonder that Trump will try to reassure Americans that he has cut them a deal to lower prices.
Banner / Thumbnail : Reuters / Jonathan Ernst