“If I have to do tariffs on oil coming from outside, or if I have to do something to protect thousands and tens of thousands of energy workers, and our great companies that produce all these jobs, I’ll do whatever I have to do”, Donald Trump said, at Saturday’s edition of the daily White House coronavirus briefing.
At current levels, oil prices are “going to hurt a lot of jobs”, he added.
The president’s remarks came amid news that a virtual OPEC+ meeting planned for Monday to address the collapse in prices may be delayed after Saudi Arabia took offense to comments Vladimir Putin made Friday. Trump has urged Riyadh and Moscow to resolve the spat and end the price war that’s added insult to injury at a time when the market is staring down the worst demand shock in modern history.
This marks something of a change in tone from Friday, when Trump said that although he discussed the “concept” of tariffs with oil executives, “it’s a free market”.
“Ultimately the marketplace will take care of it”, he added.
“Ultimately”, that’s probably true, but by that time, lots of US jobs could be lost. And let’s face it, this is a president who famously dubbed himself “Tariff Man”, and has no qualms whatsoever about abandoning even the pretense of “free markets” to protect domestic industries.
Q1 was unfathomably bad for the energy complex in the US. Equities in the space were down some 50%.
There is no end in sight to the malaise. By almost all accounts, there is no production cut large enough to “shock and awe” the market in an environment where travel is restricted and nearly every measure undertaken to stop the spread of coronavirus is negative for fossil fuels.
“Not only is this the largest economic shock of our lifetimes, but carbon-based industries like oil sit in the cross-hairs as they have historically served as the cornerstone of social interactions and globalization, the prevention of which are the main defense against the virus”, Goldman wrote late last month. “Accordingly, oil has been disproportionately hit, likely more than 2x economic activity”.
Energy spreads have ballooned out to wides that make the 2015/2016 experience seem wholly pedestrian by comparison.
During the same Saturday briefing, the president became visibly irritated when asked about the last 24 hours, during which the Saudis and Russians have traded accusations, potentially imperiling the “deal” Trump claimed to have helped orchestrate last week.
“I’ve been against OPEC all my life”, Trump fumed. “Because what is it? It’s an illegal – you can call it a cartel, you can call it a monopoly, lot of different names for it”.
“I don’t care about OPEC, I really don’t”, he continued, clearly upset. “I think they’re going to settle it, because they’re going to be destroyed”.
Apparently, things may be even worse than our eyes are telling us, Trump suggested. “Oil is at a record low. It’s actually lower than you even think”.
That’s pretty low. Because most industry watchers “think” the main benchmarks are coming off their worst quarter in history, and some grades are trading damn near zero.