PETROANALYSIS || ARTICLE
Trump takes on OPEC at the UN
On September 25th 2018, President Trump delivered his second address to the United Nations General Assembly. Amongst other things, he pinpointed OPEC’s fault in high oil prices…
“OPEC and OPEC nations, are, as usual, ripping off the rest of the world, and I don’t like it. Nobody should like it. We defend many of these nations for nothing, and then they take advantage of us by giving us high oil prices. Not good.
We want them to stop raising prices, we want them to start lowering prices, and they must contribute substantially to military protection from now on. We are not going to put up with it — these horrible prices — much longer.”
Experts contributing to this Brookings report on Trump’s UN address had the following to say on this:
(…) President Trump’s policy to severely curtail oil exports from Iran is an important driver of today’s high oil prices. OPEC (apart from Iran) and Russia have already increased production in response, and there are limits to how much more they could do.
I don’t know whether this bluster is for a U.S. domestic audience (…) But it demonstrates a misunderstanding of oil market conditions.
Samantha Gross, Foreign Policy
(…) As a cartel with voluntary membership, OPEC has little power over its members’ production. In any case, OPEC countries, including Saudi Arabia, are producing close to their production capacities and cannot do much more to reduce prices.
Djavad Salehi-Isfahani, Global Economy and Development
(…) in this passage, “America First” is back. Here is the classic Trump admonition for allies (and non-allies) in OPEC. In energy, and in the politically-explosive issue of gas prices in the United States, Trump’s two inclinations in the Middle East come to a head.
Natan Sachs, Foreign Policy
This is not the first time that President Trump has harangued OPEC. At the beginning of July this year he accused the organization of pushing gasoline prices higher, saying on Twitter…
“The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!”
He also called for OPEC to take action reducing oil prices as many of the group’s key members were preparing to meet with their Russian allies in Algeria mid-September, and said:
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember,” wrote Trump in a tweet. “The OPEC monopoly must get prices down now!”
This is clearly a theme that is close to President Trump’s heart.
“Brookings experts on Trump’s UNGA speech”. Brookings, 26th September 2018.
“Trump to OPEC: ‘Reduce pricing now!’”. Reuters, 4th July, 2018.
“Trump accuses Mideast producers of pushing oil price higher”. S&P Global, 20th September 2018