History will paint Donald Trump as many things but surely not as a man of consistency or steadiness. His opinions seem to oscillate like a seismometer in an earthquake and for a man who sported placards suggesting “Trump Digs Coal” during the 2016 presidential election race, it was inevitable the hydrocarbon industry would enter his cross hairs on a regular basis.
To the Twitterati’s fascination, Trump likes to vent on social media and recently the Organisation of the Petroleum Exporting Countries (OPEC) has been on the receiving end of a presidential ‘Caps Lock On’ moment as he enjoined the group to take action on rising oil prices.
In isolation, one can only say this was a considered, rational observation. The countries of the Arabian Gulf might like to see strengthening prices as they are still so oil dependent, but for developed economies in the West, incipient worries about inflation and stalled growth are predictable. For a man who puts America first, such a stance makes sense – expensive oil means expensive gasoline at the pump for your average Joe.
But seemingly Trump cannot be considered and rational for very long. The one thing that inevitably fans the flames of oil price spikes is geopolitical tension. Towards the latter part of last month, Trump spouted the direst of warnings (couched in 140 characters or less) to the Iranian President Hassan Rouhani after what was, to be fair, an equally provocative remark directed at the US by Tehran’s political leader about the ‘mother of all wars’.
Iran’s OPEC governor Hossein Kazempour Ardabili had earlier last month helpfully suggested to Trump that his incendiary tweets alone have probably increased the price of oil by at least $10. It’s hard to disagree.
Ironically, though, after this latest public and worrisome spat there was little immediate upward pressure on the oil price – largely due to other decisions, and statements, originating from the US President. Reports are increasing that Trump could shortly release millions of barrels from the country’s special petroleum reserve in a bid to cool oil prices, while financial experts are hardly enamoured of the prospects for global economic growth amid possible trade wars and tit-for-tat tariffs.
The US driving season is now getting into full swing as many Americans head for the hills and the beaches. They are going to feel a pinch in their pockets as gasoline hovers at around $3 a gallon.
Persuasive forces are pulling the oil price in different directions and it is hard to get a reading on its future trajectory. Donald Trump’s impulsive nature, and his poised fingers, could have far reaching consequences from the central banks of the Gulf to the monthly budgets of Middle America.
