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In this photo of June 29, 2018, President Donald Trump gestures while speaking at an event held in the clean room in the East. Trump said King Salman of Saudi Arabia assured him that the kingdom would increase oil production, "perhaps as much as 2,000,000 barrels," in response to unrest in Iran and Venezuela. Trump told Twitter on Saturday, June 30 that he had asked Salman to increase his oil production "to make up the difference … Prices are high! He agreed!" Saudi Arabia acknowledged that the appeal had taken place, but did not mention any production targets. (AP Photo / Jacquelyn Martin, File)
If there is one thing that the politicians in power hate, it is that the price of oil increases before the elections. This is why we have seen previous administrations try to manipulate oil prices before the elections. For example, previous presidents freed oil from the strategic oil reserve to moderate oil prices ahead of elections.
This is a situation that President Trump has faced in the past year. In the summer of 2017, the price of a barrel of West Texas Intermediate (WTI) crude oil was still around $ 40. This summer, it reached the middle of the $ 70, an increase of more than 50% in one year.
One factor behind this rise is the hard line that the Trump administration has adopted against Iran. As recently as last April, Iran would have exported more than 2.6 million barrels of crude oil a day. Iran is one of the top 10 world exporters of crude oil, accounting for nearly 5% of world crude oil exports in 2017.
The Trump administration has cracked down on the Iranian oil industry, warning countries against continuing purchases of Iranian crude oil. But this strategy will inevitably lead to higher oil prices unless the oil market has enough production capacity.
Saudi Arabia has sought to reassure world oil markets that it could offset the loss of Iran's oil exports, but many analysts are skeptical about the fact. they can do it easily. This is especially true given the ongoing implosion of the Venezuelan oil industry and the resulting decline in oil exports from that country.
Therefore, the Trump administration is in the difficult position of wanting to strengthen ties with Iran, while avoiding soaring oil prices. So, while the date of November 5th was close for the countries to eliminate Iran 's oil imports, the Trump administration blinked.
The Trump Administration announced last week that it would grant exemptions to eight countries to allow them to continue importing Iranian oil for the time being. The exemptions give these countries 180 additional days to phase out their purchases of Iranian crude oil. In my opinion, this measure was intended to prevent a surge in oil prices just before this week's election.
It should be noted that while oil prices have risen about 10% from the beginning of the year, the price of WTI has fallen by about 10% over the past month. This is mainly due to crude oil inventories in the United States that have risen for six consecutive weeks.
This increase in crude stocks may be partly explained by the ongoing trade war with China. As a result of the repeal of the ban on crude oil export in 2015, Chinese exports of US crude oil have skyrocketed. Until July of this year, China imported more than half a million barrels of crude oil per day from the United States.
But China has recently announced that it has suspended imports of US crude oil because of the trade war with the United States. It probably did not reduce its oil consumption by half a million barrels a day. countries – including Iran – to fill this void. But the loss of this export market has helped to increase crude oil inventories and lower crude oil prices in the United States.
Thus, at least one policy of the Trump Administration helps to lower oil prices, even if this is only a consequence of a niche market.
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In this photo of June 29, 2018, President Donald Trump gestures while speaking at an event held in the clean room in the East. Trump said King Salman of Saudi Arabia assured him that the kingdom would increase oil production, "perhaps as much as 2,000,000 barrels," in response to unrest in Iran and Venezuela. Trump told Twitter on Saturday, June 30 that he had asked Salman to increase his oil production "to make up the difference … Prices are high! He agreed!" Saudi Arabia acknowledged that the appeal had taken place, but did not mention any production targets. (AP Photo / Jacquelyn Martin, File)
If there is one thing that the politicians in power hate, it is that the price of oil increases before the elections. This is why we have seen previous administrations try to manipulate oil prices before the elections. For example, previous presidents freed oil from the strategic oil reserve to moderate oil prices ahead of elections.
This is a situation that President Trump has faced in the past year. In the summer of 2017, the price of a barrel of West Texas Intermediate (WTI) crude oil was still around $ 40. This summer, it reached the middle of the $ 70, an increase of more than 50% in one year.
One factor behind this rise is the hard line that the Trump administration has adopted against Iran. As recently as last April, Iran would have exported more than 2.6 million barrels of crude oil a day. Iran is one of the top 10 world exporters of crude oil, accounting for nearly 5% of world crude oil exports in 2017.
The Trump administration has cracked down on the Iranian oil industry, warning countries against continuing purchases of Iranian crude oil. But this strategy will inevitably lead to higher oil prices unless the oil market has enough production capacity.
Saudi Arabia has sought to reassure world oil markets that it could offset the loss of Iran's oil exports, but many analysts are skeptical about the fact. they can do it easily. This is especially true given the ongoing implosion of the Venezuelan oil industry and the resulting decline in oil exports from that country.
Therefore, the Trump administration is in the difficult position of wanting to strengthen ties with Iran, while avoiding soaring oil prices. So, while the date of November 5th was close for countries to eliminate Iran's oil imports, the Trump Administration blinked.
The Trump Administration announced last week that it would grant exemptions to eight countries to allow them to continue importing Iranian oil for the time being. The exemptions give these countries 180 additional days to phase out their purchases of Iranian crude oil. In my opinion, this measure was intended to prevent a surge in oil prices just before this week's election.
It should be noted that while oil prices have risen about 10% from the beginning of the year, the price of WTI has fallen by about 10% over the past month. This is mainly due to crude oil inventories in the United States that have risen for six consecutive weeks.
This increase in crude stocks may be partly explained by the ongoing trade war with China. As a result of the repeal of the ban on crude oil export in 2015, Chinese exports of US crude oil have skyrocketed. Until July of this year, China imported more than half a million barrels of crude oil per day from the United States.
But China has recently announced that it has suspended imports of US crude oil because of the trade war with the United States. It probably did not reduce its oil consumption by half a million barrels a day. countries – including Iran – to fill this void. But the loss of this export market has helped to increase crude oil inventories and lower crude oil prices in the United States.
Thus, at least one policy of the Trump Administration helps to lower oil prices, even if this is only a consequence of a niche market.
