US President Donald Trump’s tweets about OPEC and oil prices are more likely to worry the market and put upward pressure on prices than reassure it.
Trump’s interventions with tweets “unsettle” the market and appear to have pushed prices up, Standard Chartered Plc energy analyst Emily Ashford and head of commodities research Paul Horsnell wrote in a note Tuesday.
With oil prices rising ahead of US November midterm elections, Trump has tweeted his frustration three times to no avail.
Two posts on Twitter in June criticised OPEC prices for being too high. In the most recent tweet on June 30, Trump claimed that he and Saudi Arabian King Salman Bin Abdulaziz agreed to a 2-million-barrel production increase, but the White House later backpedalled.
Those tweets implied that supply deficits will require all of the world’s remaining spare production capacity to come online, according to Standard Charted.
This most recent Twitter post also made it look like US policy is reliant on Saudi Arabia’s spare capacity to fill global supply gaps, the analysts wrote.
If Trump’s tweets are taken as policy, it means the US is assuming a 2 million barrel-a-day increase is readily available from the Saudis, a relationship that has already been leveraged “to the maximum extent.” But in reality, Horsnell and Ashford write that there is probably “little more” than 700,000 barrels available in the short-medium term.
Saudi Arabia’s crude output reached 10.3 million barrels a day in June, and the bank doubts the country can sustain an increase above 11 million in 2018.
“US oil diplomacy has at points in the past been highly successful in calming oil markets, and it has generally been more successful the quieter it has been,” the analysts wrote.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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