Early on Friday morning, US President Donald Trump tweeted that “OPEC is 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!”
Trump tweet comes after Saudi officials say they would like oil prices to hit $80-$100 a barrel
US President Donald Trump tweeted on Friday that he believes “Oil prices are artificially Very High!” due to OPEC’s supply reduction agreement that has all but evaporated a global crude glut that drove crude prices below $30/barrel in January 2016.
“Looks like OPEC is 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!” tweeted Trump at 6:57 a.m.
Following the tweet, Brent crude fell by nearly a dollar after hitting a near four-year high of $74.75/barrel on Thursday. By 2:03 p.m., EDT, Brent crude futures were at $73.73/barrel, down 5 cents and US WTI crude was down 11 cents to $68.22/barrel. The Canadian Crude Index fell 70 cents to $49.03/barrel.
Many analysts are unsure what triggered the Trump tweet which came one day after the Saudis said they would like to see oil hit between $80-$100/barrel. However, some argue Trump is appealing to his base who are unhappy with rising gasoline prices.
Motorist advocacy group, AAA, reported that average US gasoline prices hit $2.75/gallon Wednesday and are up over 30 cents from last year.
Josh Graves, senior market strategist at RJO Futures told Reuters that Donald Trump is “just trying to relate to his base when it comes to the retail gasoline prices, so he’s blaming OPEC for this.”
A number of OPEC members responded to the accusation, saying oil prices are not artificially inflated.
According to Reuters, OPEC and non-OPEC delegates attending a meeting in Jeddah, Saudi Arabia argued oil prices are higher now because of geopolitical tensions, including unrest in Venezuela, military strikes on Syria and sabre-rattling over North Korea.
One factor in the recent rise in oil prices is “the market’s perception that (Trump’s) administration is taking an increasingly hawkish stance on foreign policy,” Michael Tran, commodity strategist at RBC told Reuters.
OPEC’s Secretary General Mohammad Barkindo told Reuters the OPEC supply cut deal turned around the collapse in oil prices, and is “on course to restore stability on a sustainable basis in the interest of producers, consumers and the global economy.”
“We don’t have any price objective in OPEC, and not in this joint endeavour with non-OPEC,” Barkindo said in response to Trump’s tweet. “Price is not our objective. Our objective remains restoring stability… on a sustainable basis.”
Tran added “We have a difficult time seeing how OPEC would in any way be swayed here in terms of changing course, in terms of policy.”
There was no follow-up from the White House following the tweet on any actions the Trump administration would take regarding oil prices or OPEC.
According to OPEC’s monthly report issued earlier in the week, last month, members participating in the supply pact achieved compliance of 158 per cent of their pledges to cut production.
The agreement has seen crude inventories fall to near five-year averages, which was OPEC’s goal.