President Trump's pressure campaign on OPEC to keep supply robust, and hence prices relatively low, could bring some tricky domestic political and economic tradeoffs.
The big picture: The Eurasia Group's Robert Johnston, writing for Axios this morning, points out that Trump has broken with his GOP White House predecessor, even though they're both in the drill-baby-drill camp:
"Trump’s ongoing campaign against higher oil prices marks a shift from Republican oil policy in the Bush era, which generally relied more on markets to respond to high prices. Despite the presence of oil-friendly cabinet members such as Rick Perry and Ryan Zinke, Trump has aimed to keep prices low."
The intrigue: As Johnston and others have been pointing out recently, there are ultimately diverging interests among U.S. oil producers and U.S. drivers.
- Trump's attempts at market pressure side with the latter, even as he's paring back regulations and making other industry-friendly moves.
- "Trump’s energy policy is consumer first. Neither the Saudis nor the markets should assume he is going to support or even tolerate higher prices to help U.S. shale," Johnston writes.
What they're saying: One sign of the times came this week in Scotland. Via S&P Global Platts...
- "US President Donald Trump has provided 'vital' support to business in that country by removing regulatory hurdles and speeding up decisions, BP chief executive Bob Dudley said Wednesday, rejecting the idea Trump's calls for lower oil prices might harm oil companies."
But it's noteworthy that this discussion is happening under a president who campaigned on a very pro-industry platform.
- And as my colleague Amy Harder wrote earlier this year, some other moves by Trump — notably his trade policy decisions — have rankled the industry.
Between the lines: Over at the New York Times, Clifford Krauss has a good distillation of where things stand with Trump's market goals, noting that the president is "playing a tricky game" because a price collapse would hit workers hard in oil-producing states including Texas, Oklahoma and North Dakota.
- For the moment, Krauss writes, U.S. oil prices in the $50-per-barrel range are "close to an economic sweet spot" that neither burdens consumers and businesses nor bankrupts energy producers.
- But nonetheless, the recent price drops mean that U.S. shale producers are already making plans to trim their planned 2019 spending, Bloomberg reports.
What's next: All eyes will be on the Dec. 6–7 OPEC meeting.
- The cartel plus mega-producer Russia will decide whether to jointly trim output in order to tighten up the market amid expanding U.S. supply and signs of softening demand growth.