For US President Donald Trump, the tweeted blurt has become a signature tool of policy expression.
Trump thumb-lectured the Organization of Petroleum Exporting Countries on Sept. 21 before a weekend meeting in Algiers of the Joint Ministerial Monitoring Committee (JMMC), representing nations coordinating oil supply.
“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. The OPEC monopoly must get prices down now!”
As neither oil-market commentary nor international diplomacy does this bristle with insight. The JMMC was to review market assessments and recommend production changes by participants in the late-2016 agreement that has successfully dissipated a stubborn, price-crushing surplus.
What the 12 participating OPEC members and 10 nonmember collaborators seek is not “higher and higher oil prices” but, in fact, market balance. Prudent oil exporters know that oil prices forced upward extinguish demand disastrously.
With production restraint, the OPEC+10 group has achieved an inevitably tenuous balance keeping oil prices in a range that punishes neither producers nor consumers. It receives help from the inabilities of Libya and Venezuela to produce at implied-quota rates.
If OPEC+10 indeed wanted to raise prices, the method would be a production cut. Because a substantial cut looms, however, premeeting murmuring focused on how much production should rise to keep the market balanced.
Responsible for that cut is none other than the quick-thumbed resident of the White House.
A supply drop of 1.5 million b/d is possible when sanctions revisit Iran after Trump’s withdrawal from the Joint Comprehensive Plan of Action on Tehran’s nuclear development.
Trump’s thumb-thumping about oil prices cannot have been warmly received by delegates in Algiers.
And the president ignores much by implying that the US keeps military forces in the Middle East only to defend countries there. The US has interests in the region, too, many related to oil.
Misinformed nagging is no way to defend them.
(From the subscription area of www.ogj.com, posted Sept. 21, 2018; to comment, join the Commentary channel at www.ogj.com/oilandgascommunity.)