Sep 26, 2018

Takeaways from Trump's new OPEC offensive

Photo: Omar Marques/SOPA Images/LightRocket via Getty Images

President Trump's latest attacks against OPEC, delivered at the United Nations yesterday, arrive amid oil trading close to 4-year highs.

The big question: Will the White House move to release oil from the Strategic Petroleum Reserve, and perhaps even throw its support behind the (largely symbolic) "NOPEC" legislation that would go after OPEC with U.S. anti-trust laws?

Worth noting: Trump also said the U.S. is working with buyers of Iranian crude to cut purchases "substantially" as energy sanctions loom in early November.

  • That word could be important. His posture toward Iran was bellicose. But "substantially" could be a sign that the U.S. isn't bent on completely squeezing Iranian barrels out of the tight global market yet, according to Frank Verrastro of the Center for Strategic and International Studies.

The details: Trump's UN move came two days after OPEC and allied producers declined to commit to additional output hikes.

  • He bashed the cartel for "ripping off" the world and said, "we are not going to put up with it, these horrible prices, much longer."
  • "We defend many of these nations for nothing, and then they take advantage of us by giving us high oil prices," Trump said.
  • Later in the day, the State Department's energy feed on Twitter, not typically a rollicking platform for Trump, drew some attention in oil circles by signal-boosting his attacks.

What they're saying: Several analysts said Trump's OPEC remarks signal concern that looming U.S. sanctions on Iran — which are already putting upward pressure on prices — will create political problems ahead of the elections.

"Trump’s statement is more directly aimed at domestic audiences, creating a bogeyman he can point to during election season if gasoline prices rise to levels unacceptable to U.S. voters."
— Atlantic Council's Randy Bell writes

The big picture: "I think Trump used the speech on the world stage to voice his displeasure directly to those Gulf countries in a way that is likely even more impactful than one of his tweets," said Joe McMonigle of Hedgeye Risk Management.

"I expect that further messages are being passed to the leadership of these countries by U.S. officials this week."
— Joe McMonigle tells Axios

The intrigue: Verrastro said one thing to watch is how oil markets weigh Trump's intentions going forward.

  • He sees "countervailing" forces. On the one hand, there's the suggestion of paring back military support in that region that could put upward pressure on prices. On the other hand, there are hints of some wiggle room for Iranian crude buyers that could help lower prices.

Go deeper: Bloomberg has a detailed story about speculation that Trump will tap the SPR.

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Sanders, Biden, Klobuchar and Steyer in South Carolina on Feb. 25. Photo: Jim Watson/AFP via Getty Images

Sen. Bernie Sanders wanted to keep his momentum after winning contests in New Hampshire and Nevada, while former Vice President Joe Biden hoped to keep his own campaign alive. The other five candidates were just trying to hang on.

What's happening: Seven contenders for the Democratic presidential nomination were in Charleston, South Carolina, for the tenth debate, just days before the South Carolina primary and a week before Super Tuesday. They spoke, sometimes over each other, about health care, Russian interference in the election, foreign policy the economy, gun control, marijuana, education, and race.

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Former Vice President Joe Biden, right, makes a point during Tuesday's Democratic presidential debate, while Vermont Sen. Bernie Sanders listens. Photo: Win McNamee/Getty Images

The 10th Democratic debate was billed as the most consequential of the primary thus far, but Tuesday night's high-stakes affair was at times awkward and unfocused as moderators struggled to rein in candidates desperate to make one last splash before Saturday's primary in South Carolina and Super Tuesday.

The big picture: After cementing himself as the Democratic favorite with a sweeping win in Nevada, Sen. Bernie Sanders came under fire as the front-runner for the first time on the debate stage. Former New York Mayor Michael Bloomberg, who will be on the ballot for the first time next Tuesday, was a progressive foil once again, but he appeared more prepared after taking a drubbing at the Nevada debate.

Coronavirus spreads to Africa as U.S. soldier in South Korea tests positive

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens.

A 23-year-old American soldier stationed at Camp Carroll in South Korea has tested positive to the novel coronavirus, as the outbreak spreads to more countries.

The big picture: COVID-19 has killed more than 2,700 people and infected over 80,000 others, mostly in mainland China. Public health officials confirmed Tuesday the U.S. has 57 people with the novel coronavirus, mostly those repatriated from the Diamond Princess cruise ship.

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