Trump Asked Saudi Arabia To Boost Oil Production By 1 Million Barrels Per Day

It all started on April 20, when having tweeted at and about virtually everything else, President Trump realized that surging oil and gasoline prices are wreaking havoc on his economic agenda and eating away at the benefits from his tax cuts, and so he made it clear when he lashed out on twitter against OPEC which he said was "at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!"

The result was instant, sending the price of oil sharply lower....

... and effectively capping the price oil, which is now at the level when Trump made his warning.

Since then Trump's stance has only hardened, and because the US president has become an especially good friend with the ruling Saudi regime, there has been a dramatic reversal within OPEC, whose next meeting is now expected to see the cartel and Russia modestly boost oil production to comply with Trump's demand.

But by how much?

This morning Bloomberg reported the answer, when it said that the Trump administration has quietly asked Saudi Arabia and other OPEC producers to increase oil production by about 1 million barrels a day, or - not surprisingly - just enough to offset expected Iran oil export declines as a result of Trump's renewed embargo on Tehran.

The rare request came after U.S. retail gasoline prices surged to their highest in more than three years and President Donald Trump publicly complained about OPEC policy and rising oil prices on Twitter. It also follows Washington’s decision to reimpose sanctions on Iran’s crude exports that had previously displaced about 1 million barrels a day from global markets.

As Bloomberg adds, while U.S. lawmakers have habitually criticized the Organization of Petroleum Exporting Countries at times of high oil prices, and the government has on occasion encouraged the cartel to pump more, it’s unusual for Washington to ask for a specific output hike, although not that unusual when one considers just how much effort Trump has put into becoming a BFF with the Saudi rulers. Also, Bloomberg notes that it was not clear precisely how the request was communicated.

The disclosure of the American request emerged over the weekend, when some Arab oil ministers discussed oil production in Kuwait City. The meeting was followed by a statement which pledged to “ensure stable oil supplies are made available in a timely manner to meet growing demand and offset declines in some parts of the world.” And, as reported at the time, Saudi Arabia and Russia last month proposed a gradual production increase, although other members of the group have yet to agree.

While the White House refused to comment on any specific conversations with Saudi Arabia, a spokesman told Bloomberg that "we welcome any market-based action that increases energy access and fosters a healthy global economy."

Treasury Secretary Steven Mnuchin hinted last month that Washington had "various conversations with various parties about different parties that would be willing to increase oil supply to offset" the impact of U.S. sanctions on Iranian oil output. Only four countries among OPEC and its allies hold enough spare production capacity to offset that impact: Saudi Arabia, Russia, the United Arab Emirates and Kuwait.

A formal revision to the cartel's oil output is expected to be proposed in 2 weeks when OPEC and its allies will meet in Vienna on June 22 and 23 to discuss their production policy for the second half of the year. Saudi Oil Minister Khalid Al-Falih last month said the kingdom shared the "anxiety" of consuming nations about high oil prices and added that OPEC and its allies were "likely" to boost output, undoing nearly 2 years of "progress" following the Vienna oil output deal which cut 1.6 mmb/d from world production in an attempt to eliminate the record inventory overhang, and nearly doubling the price of oil from $45/barrell to $80.

As Bloomberg concludes, the most recent comments by Trump and the request for extra oil are among the most forceful U.S. intervention in OPEC affairs since Bill Richardson, the energy secretary during the second administration of Bill Clinton, phoned the Saudi minister in the middle of an OPEC meeting in 2000 asking for a production increase.

The intervention enraged other members of the cartel, exacerbating a schism between Saudi Arabia and Iran. This time around, it appears that Trump's peculiar brand of diplomacy may have achieved its goal without angering anyone.

Comments

hola dos cola tmosley Tue, 06/05/2018 - 11:14 Permalink

He will sell the hoofed one a nuclear weapon. That's what this is all about, Iran incl..

And you know, ~actually you don't, that's why i tell you now~, they will fumble and lose it. And then...?

No tmosley, I cannot see those two sell it a nuclear weapon either. But the new guy stood up to own the market. And now he's playing it with his 'prince', who wants to be like Kim, for the taxcuts and a bomb.

 

 

In reply to by tmosley

directaction GoFuqYourself Tue, 06/05/2018 - 06:30 Permalink

 Of the 20 million bbls/d the US burns, only about one is from Saudi Arabia.

This tells me the USA is having trouble meeting its energy needs. 

The Saudi's are in terminal decline and unable to increase oil production. 

Which means the end of industrialized civilization is drawing near.  

In reply to by GoFuqYourself

shortonoil directaction Tue, 06/05/2018 - 07:11 Permalink

Saudi's 28 major fields are in decline at a 3% annual rate. They brought two new fields (their last) online a couple of years ago to keep production constant. Those two fields with a 550,000/d barrel capacity boosted their total production by 200,000/d barrels a day. This is almost funny! The Saudis now don't have enough spare production capacity to fill the tank of a Fiat. Dream on Donald, oil prices are going down because demand is set to collapse. Strong demand requires a strong world economy, and that is not what you have. Just keep the plans going on how to have the US be the last man standing. With the world now burning 9 barrels for every 1 it finds, it is the only route available. In, case you haven't noticed, the world is powered by oil.

http://www.thehillsgroup.org/

In reply to by directaction

Ecclesia Militans shortonoil Tue, 06/05/2018 - 07:22 Permalink

Do you have any idea just how much surveyed but untapped capacity exists today?  I've seen some of those fields (Zubair/Majnoun/Rumallah in southern Iraq and the entire western half of Libya) in person and believe me, they will be tapped and exploited once there is sufficient stability to promulgate capital investment and you will be referencing the newest and largest fields globally.

There are GPS-guided thumper trucks all along the highway from Sobrata outside Tripoli to Zouara on the border with Tunisia right now.  Lightest sweetest crude for the drilling with enough capacity at Mellitta to pipeline it to Italy today. 

In reply to by shortonoil

Golden Showers Tue, 06/05/2018 - 06:38 Permalink

Ok, so, Saudi Arabia.

Get me Saudi Arabai on the fucking horn right now!

Who answers? Welcome to Saudi Arabia hotline, may I take your order please?

Yeah. I want a million more barrels of oil right fucknig now! Do you hear me? Right now.

Ok. Sir, may I please have your confirmation code?

Listen to me: I need 365 million more barrels of crude right fucking now or I'm gonna look like an asshole. And if you don't turn on the tap you're gonna look like an asshole, you got it? Right now! Do it!

I've got a country to run and this gas price is fucking me straight up Main Street. You get me?

It all started on 4-20.

Meanwhile, in some god damn noir back room all the criminals are laughing. It's not called being bent over a barrel for nothing. It's all about etiquitte and timing. The fantastic magical unicorn is that the almighty US has to call it's oil friends down the block for some grease like it's West Side Story and shit because we don't fucking have it. That's pathetic.

And what the fuck is Saudi Arabia gonna say? No? What a joke!

Davidduke2000 Tue, 06/05/2018 - 06:39 Permalink

trump boasts he wants to sell oil and gas  to Europe , why don't he boost his own production 1 million barrel a day.

But the jig is up and we know that the us is a net importer of oil but he wants to crash the price for Russia like obama did, but this time the saudis will look for their own interests and would refuse.