I don’t recall Donald Trump ever groveling to OPEC to increase their oil production. From Ryan Fitzmaurice at zerohedge.com:
- The White House released a statement on Wednesday pleading with OPEC+ to increase oil production to stem off inflationary pressures from higher domestic gasoline prices
- The world’s biggest oil consumer showed its political vulnerability to higher oil prices this week and more specifically skyrocketing consumer inflation
- The push for “green” energy is also putting upward pressure on commodity price inflation
Oil markets started off the week under pressure as continued speculative “long” liquidation amid delta variant demand concerns weighed on prices. However, in an ironic twist, the oil market got a boost from an unlikely source on Wednesday as the Biden administration announced it was pleading with OPEC+ members to increase oil production to stem inflationary pressures from rising domestic gasoline prices.
The White House announcement was naturally intended to pressure oil prices lower as has worked under past administrations but instead the opposite occurred as the oil market saw right through the veiled attempt (while spurring criticism from all sides including industry lobbyists, “climate scientists”, progressives and conservatives). For starters, OPEC+ and more importantly Saudi Arabia, are unlikely to answer Biden’s calls for more crude oil as they already have a fully agreed to plan in place. Further to that end, the US/Saudi relationship is quite strained as the Biden administration has pivoted towards Iran as it anxiously looks to re-enter the Iran nuclear deal, but so far with little success. As such, the oil market rightly interpreted the desperate plea as coming from a place of weakness and not strength which led to strong gains in the notoriously unforgiving financial oil markets on Wednesday.