Trumped up oil prices? Looks like OPEC is at it again," President Donald J. Trump tweeted Friday morning. As OPEC ministers meet in Saudi Arabia with prices for the international benchmark at almost four-year highs, what could the U.S. actually do to bring down the global price of oil?
1. KEEP IRAN DEAL IN PLACE
Fears that the U.S. will reimpose sanctions on Iran when the nuclear deal comes up for review again next month are adding to uncertainty in the market. The Obama administration’s agreement with Iran has boosted production from the nation by more than 1 million barrels a day. Seventeen respondents to a Bloomberg survey of oil-market analysts saw on average a 50-50 chance of a sanctions “snap-back,” which could halt anywhere as much as 800,000 barrels a day of exports from OPEC’s third-largest producer within the next six months.
2. LIFT SANCTIONS ON VENEZUELA
The South American nation -- and OPEC member -- has seen its output decline rapidly since the U.S. and other nations imposed tougher financial sanctions to punish President Nicolas Maduro. Among the list of people subject to the sanctions are the former chief financial officer for state-owned Petroleos de Venezuela SA. In a partial response to sanctions, Maduro has introduced a cryptocurrency based on the nation’s oil reserves, the largest in the world, although the U.S. has warned that may also be subject to sanctions.
3. REPEAL THE JONES ACT
Section 27 of a law enacted in 1920 requires that goods transported by ship between U.S. ports be carried on vessels built and flagged in the U.S. and owned and manned by U.S. citizens. That drives up the cost of shipping U.S. crude from the Gulf Coast, for example, to refineries on the East Coast, which often use international oil instead. Arizona Republican Senator John McCain, among others, has called for the act to be annulled.
3 1/2. JUST TALK
Oil prices fell 1.6 percent to US$67.70 immediately following Trump’s tweet. Maybe the most effective thing he can do in the near term is exactly what he is doing -- talking.
--With assistance from Alex Longley Grant Smith and Christopher Sell