0902 GMT July 22, 2018
This comes as at present, international experts' attitude about the hike in oil prices is in stark contrast with Trump's rhetoric. They maintain that recent US policies are the main factor to blame for the increase in the global petroleum prices.
Analysts list the most important stimuli raising oil prices as the Trump administration's constant interference in Middle East affairs, an international climate of distrust created by Washington concerning the Joint Comprehensive Plan of Action (JCPOA) and US sanctions on Venezuela.
In addition, unlike Trump, analysts hold that the rise in the value of black gold fails to be completely to the detriment of US economy.
Although Trump's Twitter row with OPEC impacted the transactions of global oil market on Friday, the petroleum ministers of a number of OPEC member states reacted to his remarks concerning oil prices. These reactions pushed prices up again. This came as analyses by some experts placed the blame for the significant growth in prices on Trump and his policies. Thus, the loser of Trump's first war of words against the oil market was nobody but him.
Criticizing the rise in oil prices on Friday, Trump wrote on his Twitter page that "looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!"
Trump's Twitter remarks were made concurrent with the meeting of the ministerial panel of OPEC and non-OPEC producers, called the JMMC, that had gathered in Jeddah on Friday, and thus, was met with the reaction of officials participating in that convention.
Addressing the meeting, Khalid al-Falih, the Saudi energy minister, defended the price rise, saying the world economy had the 'capacity' to handle it but has denied the kingdom had a price target.
Al-Falih's remarks were followed by an increase in oil prices, which, per se, elicited Trump's reaction.
On Friday, having witnessed a 28-cent rise in price, Brent crude was sold at a three-year high of $74.06 per barrel. The index of WTI crude oil also jumped 7 cents on the same day to be traded at $68.40 a barrel. During the past week, Brent crude index rose $1.48 (two percent). The price of US crude oil also climbed 99 cents, some 1.4 percent, to become closer to $70 per barrel.
US to blame
Despite Trump's accusation that OPEC was manipulating oil prices, a closer glance at the reasons for the growth in the value of petroleum in recent weeks, shows that US foreign policies, towards the Middle East and Venezuela, have played a much more significant role in pushing up the prices, rather than OPEC's plan to extend its production-cut agreement.
Geopolitical risks have always played a significant role in raising oil prices. Definitely, among the factors leading to the recent rise in oil prices have been Trump's military attack on Syrian territory and constant threats of withdrawing from the JCPOA as well as his move to appoint anti-Iran ministers to his cabinet, adopt hostile policies toward Russia and impose oil sanctions on Venezuela.
On Friday, Reuters quoted Bob Yawger, director of energy futures at Mizuho in New York, as saying, "The only thing [Trump] can really do [to bring oil prices down] is drain the SPR (Strategic Petroleum Reserve). Now, I have not seen any indication that the administration plans on doing that."
Analysts hold that even speaking of Trump draining SPR can place pressure on crude prices in the market. Nevertheless, adopting more moderate political stances by Trump administration can help make oil prices more reasonable.
At present, radical decisions is the only thing market perceives of Trump's cabinet and his foreign policy. These decisions can increase the number and severity of geopolitical risks. On May 12 the US will announce whether it will withdraw from the JCPOA or not. Paradoxical symptoms confirming or rejecting this probability are among the political factors pressurizing the global oil market and for which the Trump administration is held accountable.
In case the US pulls out of the nuclear deal, it will impose embargoes on Iran, which, per se, will lead to an up to 500,000 barrels drop in Iran's oil supply to the international market. This will definitely widen the gap between supply and demand in oil market and push the prices up.
Trump's remarks about oil prices was met with reactions from oil ministers of OPEC member countries and experts, with the latter maintaining that the US president has blundered in his recent comments about petroleum prices as a rise in the value of oil is not necessarily a negative phenomenon, particularly for the producers of the hydrocarbon product in the US.
Prior to 2014, when oil prices had peaked, the increase in oil prices played an important role in the rise in investments in US Shale oil industry and the country's crude production. Although the price increase can prove very risky for OPEC and it is in the interest of the organization to stop this trend, experts maintain that Trump's, as the president of a country which has always benefited the most from the increase in the value of petroleum, disapproval of the price hike is quite strange.
In a Friday report, Bloomberg wrote: "President Donald Trump may have a problem with oil prices being 'very high', but a decline would be a mixed bag for the US economy, thanks to the boom in American energy production.
"When prices plunged starting in mid-2014 and stayed low for the next two years, US producers felt the pain, much more and longer than was expected. A pullback in demand for oil-related equipment slowed mining and manufacturing output cooled investment and hurt jobs."
It added the idea of cheap oil as a clear positive for the US harks back to an earlier era when it would boost consumption, contain the trade deficit and hold down costs for businesses, saying, "Now oil prices play a more nuanced role: There's been a boom in shale oil production, helping reduce petroleum imports and boost exports. And the global energy-price recovery since mid-2017 has helped usher a rebound in US manufacturing and capital spending, underpinning growth."
The above analysis was first published in Persian by Donya-ye Eqtesad.