As Trump Presses OPEC to Reduce Costs, Oil Prices Decline

Amid worries about rising oil prices throughout the world, Trump has put further pressure on OPEC to cut prices.

Following his announcement of policies to increase US oil and gas output during his first week in office, US President Trump pushed OPEC to decrease prices, which caused oil prices to drop on Monday.

After finishing up 21 cents on Friday, Brent crude dropped 53 cents, or 0.68%, to $77.97 a barrel around 0430 GMT.

The price of US West Texas Intermediate crude dropped 50 cents, or 0.67%, to $74.16 a barrel.

Trump reaffirmed his demand on Friday for the Organization of the Petroleum Exporting Countries to reduce oil prices in an effort to destabilize Russia’s economy and aid in the conclusion of the conflict in Ukraine.

“OPEC cutting oil prices and ceasing to make so much money is one way to put an end to it swiftly. “That war will end immediately,” Trump declared.

If an agreement to halt the war in Ukraine is not achieved quickly, Trump also threatened to slap taxes, levies, and penalties on Russia and other participating nations.

On Friday, Russian President Vladimir Putin suggested that he and Trump meet to talk about energy costs and the conflict in Ukraine.

According to John Driscoll of Singapore-based consultancy JTD Energy, “they are positioning for negotiations,” which leads to instability in the oil markets.

Driscoll went on to say that Trump’s intentions to increase US output in an effort to secure foreign markets for US petroleum might cause oil prices to tilt lower.

According to Driscoll, “he’s kind of a competitor in that he’s going to want to muscle into some of the OPEC market share.”

Trump’s proposal has not yet received a response from OPEC or its partners, notably Russia. Instead, OPEC+ representatives have pointed to an existing plan to boost oil production beginning in April.

Last week, both benchmarks fell for the first time in five weeks as worries about supply disruptions due to sanctions on Russia subsided.

Because increased freight prices have encouraged a greater supply of unapproved ships to transport Russian oil, Goldman Sachs analysts said they do not anticipate a major impact on Russian output. Price-conscious consumers have also been drawn to the Russian ESPO grade due to the growing discount.

“We assume that Western policymakers will prioritise maximising discounts on Russian barrels over reducing Russian volumes, as the ultimate goal of sanctions is to reduce Russian oil revenues,” the analysts stated.

Analysts at JP Morgan pointed out that there is still a certain amount of risk premium because sanctions are in place for about 20% of the world’s Aframax fleet.

“A zero-risk premium is inappropriate,” they continued, adding that the use of sanctions on the Russian energy industry as leverage in upcoming discussions may go either way.

In other developments, the White House said Sunday that the United States swiftly retracted its intentions to slap tariffs and sanctions on Colombia following the South American country’s agreement to take in deported migrants from the United States.

According to statistics from analytics firm Kpler, Colombia sent almost 41% of its seaborne petroleum to the United States last year, suggesting that sanctions may have affected oil supply.