Trump Pressure On Saudis Sees Oil Near $50

Having written repeatedly about the Khashoggi case in the past month, I could see comments underneath my stories ranging from the fact that the US should not depend on Saudi Arabia for Middle East support so much (as in the country being a reliable buffer against Iran exercising too much influence) as to opinions which explained that if support for Saudi Arabia helped keep oil prices down then the US shouldn’t interfere in Saudi ‘internal issues.’

Although there are arguments to be made for and against those stances, it would seem oil traders pretty much agree with the latter after oil prices fell below $60 a barrel earlier this week to hit their lowest level in more than a year. Today it fell even further and Texas Intermediate neared $50.

Traders question whether Saudi Arabia would be able to cut supply as it comes under US pressure to keep prices low, but most agree that Mr Trump’s pressure certainly kept prices down.

Already on 12 November, in the midst of the first Khashoggi case revelations, US President Trump tweeted “hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!”

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr"><a href="https://twitter.com/hashtag/Oil?src=hash&amp;ref_src=twsrc%5Etfw">#Oil</a> update ! At this pace of <a href="https://twitter.com/hashtag/oil?src=hash&amp;ref_src=twsrc%5Etfw">#oil</a> price decline, stories of <a href="https://twitter.com/hashtag/debt?src=hash&amp;ref_src=twsrc%5Etfw">#debt</a> issues at some energy-related companies are bound to pop up… <a href="https://t.co/YDqrKfTryX">pic.twitter.com/YDqrKfTryX</a></p>&mdash; jeroen blokland (@jsblokland) <a href="https://twitter.com/jsblokland/status/1065962338661138433?ref_src=twsrc%5Etfw">November 23, 2018</a></blockquote>

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Two days ago, upon his departure to Mar-a-Lago, President Trump praised Saudi Arabia for its role in the 30 per cent slide in oil prices since the beginning of October, which has seen Brent crude drop from $86 a barrel to below $60 a barrel.

On 21 November, he stated: "Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82. Thank you to Saudi Arabia, but let's go lower!"

Related coverage : <a href="http://thegoldwater.com/news/43043-Republicans-Claim-This-Is-Not-America-First-This-Is-Saudi-Arabia-First">Republicans Claim This Is Not America First, This ‘Is Saudi Arabia First’</a>.

The lower price of oil is starting to threaten the Saudi budget though, as traders agreed President Trump’s support for Saudi Arabia’s crown prince Mohammed bin Salman in the wake of the killing of journalist Jamal Khashoggi would complicate decision making in Riyadh.

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">I have seen many a waterfalls but NEVER an <a href="https://twitter.com/hashtag/OILFALL?src=hash&amp;ref_src=twsrc%5Etfw">#OILFALL</a> like this..🤔<a href="https://twitter.com/hashtag/crude?src=hash&amp;ref_src=twsrc%5Etfw">#crude</a><a href="https://twitter.com/hashtag/oilprice?src=hash&amp;ref_src=twsrc%5Etfw">#oilprice</a><a href="https://twitter.com/hashtag/OOTT?src=hash&amp;ref_src=twsrc%5Etfw">#OOTT</a> <a href="https://t.co/DwV3XLq8WR">pic.twitter.com/DwV3XLq8WR</a></p>&mdash; Hemant Mandhare (@jgdhemant) <a href="https://twitter.com/jgdhemant/status/1065968850997436417?ref_src=twsrc%5Etfw">November 23, 2018</a></blockquote>

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Mr Olivier Jakob, an analyst at Petromatrix in Switzerland, agreed with the analysis that the US President’s support for the Saudi Crown Prince was a decisive factor, stating: “President Trump has provided strong political support to Saudi Arabia, but against that he wants lower prices.”

“That is curbing the positive sentiment on oil. One realises the president is pushing to keep prices lower for longer and now he has some political leverage against Saudi Arabia.”

Analysts at Germany’s Commerzbank agreed: “to avoid U.S. sanctions, Saudi Arabia may decide to backpedal on its intended production cuts."

At the time of writing “Brent crude, the international benchmark, was down as much as 5.2 per cent at $59.34 a barrel in Friday trading, a fall of 31 per cent from its October peak of $86.74 per barrel. West Texas Intermediate, the US marker, was 7 per cent weaker at $50.92 a barrel.”

Source:

https://www.cnbc.com/2018/11/23/oil-prices-slump-to-their-lowest-level-of-2018-even-as-opec-considers-cuts.html

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