Middle East - Trump's Oil Production Tweet Creates Friction

The tweet sent out by US President Donald Trump yesterday in which he stated that oil prices were too high and he had therefore contacted King Salman of Saudi Arabia to raise production (which he claimed the latter had accepted) had multiple (unintended?) consequences.

<blockquote class="twitter-tweet" data-lang="en-gb"><p lang="en" dir="ltr">Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil &amp; disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!</p>&mdash; Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/1013023608040513537?ref_src=twsrc%5Etfw">30 June 2018</a></blockquote>

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Firstly, in Saudi Arabia itself. Besides being called out as an apparent puppet state, the Saudis do not like to raise production by 2 million barest a day as it is more costly to create excess output and the subsequent price drop which results from flooding the market with more oil will eat away at their profit margin.

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Secondly, it puts the spotlight back on Iran as President Trump clearly stated that the high price was due to ‘disfunction in Iran and Venezuela.’

<blockquote class="twitter-tweet" data-lang="en-gb"><p lang="en" dir="ltr">Iran&#39;s OPEC governor in reaction to Trump&#39;s tweet: There is no such spare capacity in Saudi Arabia. Such request means order to leave OPEC. <a href="https://t.co/4RuiqzIg4M">pic.twitter.com/4RuiqzIg4M</a></p>&mdash; IranOilMinistry (@VezaratNaft) <a href="https://twitter.com/VezaratNaft/status/1013314006147391488?ref_src=twsrc%5Etfw">1 July 2018</a></blockquote>

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Whereas the mullahs had done everything possible to keep the Tehran bazaar strikes of last week (caused for a falling currency valuation) out of the global eye, and were largely succeeding thanks to their own countrymen’s interest in the performance of their team at the World Cup and of course their strict control of the media, President Trump’s tweet made sure that Tehran strikes are once again trending on Google. Such is the power of the POTUS’s Twitter follow.

In response, Iranian Supreme Leader Ayatollah Ali Khamenei claimed that the words of Mr. Trump were simply some form of "economic pressure."

"Six US presidents before him tried this and had to give up."

Thirdly, Russian President Vladimir Putin must have looked at that tweet with grinding teeth as the level at which Mr. Trump claimed prices were ‘too high’ (around 75$ per barrel) is exactly the price point at which Russian production becomes profitable again. After years of recession for Russia’s oil sector and faced with both US and European sanctions, the Kremlin had been looking forward to having a profitable energy sector once again.