Does The U.S. Really Need Saudi Oil?
“Saudi Arabia — if we broke with them, I think your oil prices would go through the roof. I’ve kept them down,” President Trump told reporters on Tuesday. “They’ve helped me keep them down. Right now we have low oil prices, or relatively. I’d like to see it go down even lower — lower.”
Oil prices have indeed fallen significantly in recent weeks, and to be sure, Saudi Arabia has played a large role in that. Saudi production reportedly hit a record high 11 million barrels per day (mb/d) at times this month, and global inventories are rising once again.
But Riyadh is also clearly upset at being “duped” by Trump. Having been convinced by the Trump administration that Iran’s oil exports were heading to zero, or at least close to zero, Saudi Arabia ramped up supply to offset the losses.
The U.S. then surprised the market by issuing a bunch of waivers, allowing Iran to continue to export oil. Japan and South Korea may even resume buying oil from Iran in January, after cutting imports to zero in anticipation of sanctions.
Almost immediately after the waivers were issued, oil prices crashed. Saudi Arabia then promptly announced that it would cut production by 500,000 bpd in December, and the rumors of an OPEC+ cut really began to pick up.
Trump is happy about the slide in oil prices, but Saudi Arabia clearly isn’t. Saudi Arabia and its OPEC+ partners could soon take action to push prices back up. So, it isn’t clear that Washington and Riyadh have the same objectives, or that their tight relationship is resulting in lower oil prices.
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