Have no fear of OPEC’s oil power
Just three men now control the worldwide price of oil, said Julian Lee: Donald Trump, Vladimir Putin, and Mohammed bin Salman. The U.S. used to worry about the power of OPEC to cut our oil supply. Now Saudi Arabia’s 10.6 million barrels–a-day production is more than one-third of OPEC’s total, and the U.S. and Russia between them pump more oil than OPEC’s 14 other members combined. “All three are pumping at record rates.” Saudi Arabia and Russia raised output in June, amid fears of a shortage. Now those fears are over, and MBS hopes that by cutting production Saudi Arabia and other OPEC countries can raise the price of oil to $73.30 a barrel, the number the Saudis need to balance their budget. Most likely, he won’t succeed. Russia’s own budget is less dependent on oil than it used to be, and Putin “shows no great enthusiasm for restricting his production again.” Maybe he’ll decide that “maintaining his improved political relationship” with MBS is worth a small sacrifice. But count on Trump’s opposition—most likely via tweet—being much louder. And U.S. shale can fill any gaps in supply. Between Trump’s wrath, U.S. shale, and Putin’s indifference, the days of skyrocketing oil prices are over.