President Trump railed against the OPEC oil cartel on Friday, declaring that the group of oil producers had “artificially” raised oil prices and warning that such efforts would “not be accepted!” The president has frequently commented on financial markets, from stock market trends to the value of the dollar. But he has rarely commented on commodities, and oil in particular.
His remarks, which coincided with a meeting of the Organization of the Petroleum Exporting Countries in the Saudi city of Jidda, came as oil prices are at their highest point in years. Prices for Brent crude, the international benchmark, were at $73.52 a barrel, near their highest level since late 2014.
The countries agreed in 2016 to lower their crude output, and the deal remains in place. Although oil prices remain well below the heights of more than $100 a barrel in 2014, they are still more than double their price two years ago. There is no doubt that the orchestrated output curbs led by major producers have contributed to those higher prices. Saudi Arabia is the world’s largest oil exporter, Russia is a major non-OPEC oil power, and the greement has helped to ensure that a global oil glut that was depressing prices has reduced substantially. Geopolitical concerns are also coming into play. The oil industry of Venezuela, once a major OPEC producer, is near collapse, pulling down production there. There are also worries that Mr. Trump’s own threats to tear up the Iran nuclear deal will have an impact on Iranian supplies, which had increased. And worsening tensions between Saudi Arabia and Iran have added to traders’ concerns. But there are mitigating factors. Higher oil prices have spurred some suppliers to increase their production. In particular, shale oil producers in the United States have raised their output in recent months. These operators sharply cut production after prices crashed in 2014, but they have cut costs in the years since and streamlined their operations.