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Brent returned to $ 60 a barrel, prompting President Trump to reprimand OPEC by tweet earlier this week.
Trump's irritability with high oil prices is well known, but the tweet suggests he sees oil prices getting too close to dangerous political territory. He wants more supplies to lower prices, but OPEC is much less likely to heed his warning, after being burned by him last year as a result of surprise waivers on sanctions imposed by the Iran, which contributed to the fall of the market.
Trump asked OPEC to "calm down and take easy steps" and, in response, Saudi Oil Minister Khalid al-Falih said: "We are taking things lightly. take a very slow and measured approach. "
Al-Falih's comments suggest that OPEC will not shrink from US government pressure.
The confrontation is taking place at a time when the US Congress is pushing forward "NOPEC" legislation, which would open OPEC members to antitrust regulation by the US Department of Justice. Legislation targeting OPEC has been passed around Washington for years, but the momentum and the chances of its adoption have never been higher. The bill has brought together a host of events, including Democrats in the House of Representatives, an erosion of Saudi support to Capitol Hill and a mercurial president who likes to beat up OPEC's rhetorical way. Related: Oil prices could skyrocket on the trade war truce
At a minimum, the possibility that the NOPEC bill will become law gives President Trump more weight in his demands for OPEC to lower oil prices. Until now, at least publicly, he has refrained from using this threat, especially in his tweet of February 25 calling on OPEC to "relax."
"The effect of President Trump's remark would probably have been greater if he had explicitly mentioned the [NOPEC bill]"Standard Chartered analysts wrote in a note. The investment bank said the sharp drop in oil prices that day may have been due to the tweet's interpretation of the market as a veiled threat to OPEC over the NOPEC bill. However, Standard Chartered said that may not be the case. "Until now, Trump was not specialized in veiled threats. it tends to be explicit. "
So, maybe Trump is on fire, at least for the moment. Although Capitol Hill has prepared for the bill, powerful interests are opposed to it, including the American Chamber of Commerce, the American Petroleum Institute, and much of the national oil industry. After all, US oil producers are perfectly happy to let OPEC cut production in order to raise prices – OPEC measures to raise prices are entirely in favor of oilseed drillers. American shale.
US Secretary of Energy Rick Perry expressed A little skepticism on Thursday about the NOPEC bill, saying that without the management of OPEC markets, prices could collapse, striking a blow to supply, which could eventually drive up prices . Originally from Texas, Perry fears to let his friends in the shale industry suffer. In short, no OPEC market management means much more volatility.
Related: Saudi Aramco CEO Reprimands Petroleum Peak Demand
Nevertheless, OPEC is not very popular in Washington or elsewhere in the United States, so it does not really have a political constituency outside the oil industry. Breaking OPEC, or at least being considered to be facing the oil cartel, is no doubt a political winner. This gives the project a good chance of becoming law. "We consider that NOPEC could be one of the key issues of the oil market in 2019", concluded the analysts of Standard Chartered. "Although President George W. Bush has vetoed similar legislation on the ground that it would act against the US national interest, the possibility that it will be enacted if it reaches President Trump's office seems important to us."
For its part, OPEC does not like to be the bad guy. Secretary-General Mohammad Barkindo said that without OPEC, the oil industry would have been a disaster. "The OPEC has done great service" to the industry and to the world's oil markets, Barkindo told CNBC on Wednesday. "The decisions made by OPEC, together with our non-OPEC partners, have literally saved this industry from total collapse."
Asked about NOPEC legislation, Barkindo said, "You can ask producers in shale basins in the United States if they have benefited from the measures we have taken over the years."
He essentially argued that the United States needed OPEC to maintain market stability. "[W]Without OPEC, the United States would probably have created another organization that would do exactly the same. "
By Nick Cunningham from Oilprice.com
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