Jul 1, 2018

Trump says OPEC "has to" pump more oil

President Trump with King Salman in Saudi Arabia last year. Photo: Mandel Ngan/AFP/Getty Images

In an interview on Fox today, President Trump appeared to change his claim that Saudi Arabia had committed to pumping an additional 2 million barrels of oil a day, saying instead that OPEC countries "are going to have to put out more oil."

Why it matters: Resurrected U.S. sanctions on Iran will reduce OPEC supply to the market, and are already pushing up prices. In a tweet yesterday, Trump asserted that he had persuaded Saudi King Salman to raise production, but last evening, the White House said it was more like Salman agreed only to meet global demand. The new interview with Maria Bartiromo suggests that any commitment in the conversation may have been even vaguer.

Thought bubble: For the last several years, shale has obliterated the four-decade-long U.S. economic dependence on OPEC oil. But Trump's conversation with Salman put the U.S. back in the pre-shale age, when American presidents routinely went to the Saudis asking and sometimes pleading for boosts or cuts in production for U.S. economic purposes.

  • As a number of analysts have been pointing out in recent days and weeks, one spillover effect of Trump's aggressive posture toward Iran is to give Saudi Arabia and other OPEC members, as well as Russia, an even stronger hand in global markets.

Late last night, White House Press Secretary Sarah Sanders issued a readout of Trump's conversation with King Salman that backed off his original tweet, stating instead:

"In response to the President’s assessment of a deficit in the oil market, King Salman affirmed that the Kingdom maintains a two million barrel per day spare capacity, which it will prudently use if and when necessary to ensure market balance and stability, and in coordination with its producer partners, to respond to any eventuality."

Between the lines: That summary is consistent with prior statements by Saudi officials that they stand ready to respond to the demands of the tightened oil market.

  • This Twitter thread by Hedgeye Risk Management's Joe McMonigle has some helpful insights, noting at one point: "Don’t focus too much on 2 [million barrels per day] number. Trump likely doubled 1 mbd number to give Saturday morning tweet some sizzle. (US reportedly asked for 1 mbd before OPEC meeting.) Trump’s real barometer is oil price not production number."

One level deeper: The White House is facing a tricky dynamic. It's trying to punish Iran with sanctions that, if successful, would lead a steep cut in Iranian barrels on global markets.

  • But a big drop in Iranian exports combined with Venezuela's collapse could put upward pressure on U.S. gasoline prices absent an aggressive response by other producers. Pump prices are higher than they were over the last couple years, creating election year risks for Republicans.

Go deeper: Trump's pyrrhic OPEC outcome.

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Updates: Cities move to end curfews for George Floyd protests

Text reading "Demilitarize the police" is projected on an army vehicle during a protest over the death of George Floyd in Washington, D.C.. early on Thursday. Photo: Yasin Ozturk/Anadolu Agency via Getty Images

Several cities are ending curfews after the protests over the death of George Floyd and other police-related killings of black people led to fewer arrests and less violence Wednesday night.

The latest: Los Angeles and Washington D.C. are the latest to end nightly curfews. Seattle Mayor Jenny Durkan tweeted Wednesday night that "peaceful protests can continue without a curfew, while San Francisco Mayor London Breed tweeted that the city's curfew would end at 5 a.m. Thursday.

Murkowski calls Mattis' Trump criticism "true and honest and necessary and overdue"

Sen. Lisa Murkowski. Photo: Bill Clark/CQ-Roll Call, Inc via Getty Images

Sen. Lisa Murkowski (R-Alaska) said Thursday that she agreed with former Defense Secretary James Mattis' criticism of President Trump, calling it "true and honest and necessary and overdue."

Why it matters: Murkowski, who has signaled her discomfort with the president in the past, also said that she's "struggling" with her support for him in November — a rare full-on rebuke of Trump from a Senate Republican.

Facebook to block ads from state-controlled media entities in the U.S.

Illustration: Rebecca Zisser/Axios

Facebook said Thursday it will begin blocking state-controlled media outlets from buying advertising in the U.S. this summer. It's also rolling out a new set of labels to provide users with transparency around ads and posts from state-controlled outlets. Outlets that feel wrongly labeled can appeal the process.

Why it matters: Nathaniel Gleicher, Facebook's head of security policy, says the company hasn't seen many examples yet of foreign governments using advertising to promote manipulative content to U.S. users, but that the platform is taking this action out of an abundance of caution ahead of the 2020 election.