oil OPEC politics Trump

Trump Calls OPEC ‘Illegal’, Says ‘Tariff Man’ Could Make A Cameo If Necessary

"Oil is at a record low. It's actually lower than you even think".

“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.

(BBG)

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.


 

14 comments on “Trump Calls OPEC ‘Illegal’, Says ‘Tariff Man’ Could Make A Cameo If Necessary

  1. The sad fact is tariffs won’t really help the US oil industry and it will hurt the US refineries and consumers. The oil produced in the US is largely too light for US refineries which is why we are a huge exporter and importer.

    • What you are saying means consumer here will basically pay tariffs to oil exporters. We are doing that with farm products, but everybody loves farmers. If the anti-frack crowd figures out that it is not for domestic consumption and are taxed to subsidize it. They will have a point of contention. Socialist can never be as creative as crony capitalists. Election year is going to screw this recovery.

      • Yes, consumer’s will be paying more for gas and transportation, but Frackers will still be dealing with insanely low export prices meaning pain for them and HY bonds. As with most plans Trump puts out there like sending everyone back to work sick… it is as John Oliver said “like shitting on your cake and choking on it too.” If he wanted to help US producers he would simply subsidize them while also buying as much cheap oil into storage as possible while also ordering fabrication of more storage containers immediately. If the Saudi’s and Putin want to play games… let’s actually punish them for it. Sadly the Chinese are doing this as they know how to play games. Additionally they know they will need more oil coming out of this as you lose efficiency when you have to shut things down. A lesson from SARS and MERS we never had to learn.

  2. This has to be a tough one for Donald. It exposes the flaws in his ideas about using tariffs to support US businesses. In this case it is going to be a direct connection between tariffs and Americans paying higher prices at the pump.

  3. You know, someone with half a brain and a high schooler’s passing familiarity with oh…I dunno, history, physics, and economics might look at this particular world historical moment and say, “It’s time to move my country, this country I pretend to love, away from its dependence on petro states run by murderous thugs like Putin and Prince Bonesaw. But, no, Trump ADMIRES these guys, he wants to be liked and respected by them and, of course, wants their money, and if getting those things (respect, money) means selling out his grandchildren and their children, so be it. It’s all about the benjamins, baby.

    • “It’s all about the benjamins, baby.”

      Of course it is, that’s what capitalism and free markets are about. Ship your unwanted hundreds to me if you don’t want them.

  4. How low can oil go? If they do not plan well they will run out of storage before ending production. Clean up costs.

    • We already have more than a month’s supply in Cushing and more is flooding the market as we speak. It can go low unless producers slow down. Everyone’s at home, not driving.

  5. so if it is an illegal cartel (or whatever you want to call it) how does Trump justify trying to get the two big players back together?

  6. as long as opec cuts production, trump is all for opec. but in his heart he is against it. makes no sense.

  7. Doesn’t anyone want to understand this is a World problem not some self centered US thing….? All you have to do is see what others are doing and cut all this rhetoric crap… This is not some power stunt for Geopolitical goals hatched at Hampton roads…I hope……There are and have been many contingency plans on the books for decades dealing with these type scenarios…..

    • Anonymous

      “This is not some power stunt for Geopolitical goals…”

      Actually, George, I think every single action taken by Trump, Putin or MBS is ultimately intended to be a power stunt of some kind. They’ll address the virus/humanitarian issue on the surface, but in the back of their minds the overriding objective is to come out ahead of the others, at all costs.

      Sad, but likely true.

      • Agreed. The latest numbers show this “virus thing” is killing the Trump Organization to the tune of losses of at least a million dollars a day and daddy’s not around to bail him out.

      • I said ……”.I hope ” , facetiously…..lol….

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