"I would use tariffs, if I had to. I don't think I'm going to have to," U.S. President Trump told media on Sunday as quoted by CNBC, in response to questions regarding his next moves in propping up devastatingly low oil prices.
Trump has been consistent over the last week or so in his belief that despite difficulties, Saudi Arabia and Russia will reach a deal to reduce production. He has given no indication, however, that the United States is willing to take part in this production control effort, which may compromise its success.
At the same time, Trump's position reflects the position of many U.S. shale producers: last week industry sources told the Financial Times that companies had launched a lobbying offensive with the White House to use any means necessary to force Russia and Saudi Arabia to cut production, including more sanctions on Russia and import tariffs on Saudi oil.
U.S. shale producers were among the hardest-hit players in the industry when Saudi Arabia launched its game of chicken with Russia announcing it would increase oil supply to 12.3 million bpd this month, boosting its production capacity to 13 million bpd. Yet now both Riyadh and Moscow seem to be reconsidering.
Riyadh has called on Western European oil producers to join this week's OPEC+ meeting to discuss prices while Russia, according to a Bloomberg report, may be willing to cut close to a tenth of its March oil production, which stood at 11.3 million bpd, but only if the U.S. agrees to make its producers cut, too.
Trump has signalled he would prefer "the free market" to have the last word but it seems the free market could use some help. To be fair, Trump noted he did not expect it to come to tariffs.
"It's obviously very bad for them," Trump told media referring to the effect of low oil prices on Saudi Arabia and Russia. This, the U.S. president believes, will ultimately push the two to an agreement, which would benefit all producers.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
That was his game plan all along under his discredited ‘America first policy’ to justify imposing a tax or tariff on foreign crude oil exports to the United States to bail out US shale oil industry at the expense of foreign oil producers rather than US tax payers.
The US shale oil industry has been since its inception in 2008 producing recklessly even at a loss just to enable the United States to have a say in the global oil market along with Russia and Saudi Arabia. In so doing it has been depriving most of the oil-producing nations of the world particularly those who overwhelmingly depend on the oil export revenues of their livelihood and also gaining market share at the expense of Russia and Saudi-led OPEC.
It is only fair that the shale industry should share the pain with other oil-producing nations who are suffering badly from this state of events.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Russia with very minor 0.5% Oil import in USA is not relevant at all.
Canadians and Mexico would ad Tariffs to US Goods in case of US Tariffs for Oil. Not a good Ideas those are large importers. (Canada imports near 230 Billions USD)