Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to Business FM on whether the United States could convince Saudi Arabia to significantly reduce oil prices on the world market:
"Trump's position is initially contradictory. On the one hand, he promised his voters to lower domestic energy prices. On the other hand, almost all of his actions so far are aimed more at rising prices, especially for oil and gas. This also applies to the introduction of increased duties for Canada, from which the United States imports the bulk of heavy oil and a significant portion of gas. This also affects the anti-Iranian policy of the United States. The whole idea of trade wars is more likely to play into the hands of higher prices, primarily for oil. Therefore, it is not entirely clear how, in reality, Trump can fulfill his promises to lower prices. He doesn't have the tools to do that. Therefore, it is logical that he is trying to find help from Saudi Arabia, which has spare capacity. Saudi Arabia is unlikely to agree to this, because it is important for it to maintain relatively high oil prices, at least at the current level, that is, in the range of 70-80 dollars per barrel. Ideally, it would like to see prices in the range of 90-95 dollars in order to balance its budget and huge investment costs. Therefore, it is difficult to imagine that Saudi Arabia will agree to an average and long-term price reduction below 60-70 dollars per barrel. The United States should offer something to compensate for these huge losses. In addition, Saudi Arabia's capabilities should not be exaggerated. Of course, it plays a huge role in OPEC+ and has a decisive voice there, but Saudi Arabia's efforts alone are unlikely to significantly reduce prices. This requires the participation of several Persian Gulf countries. Probably, Trump can try to do this, but it is unlikely that it will lead to anything in the near future."
Subscribe for updates
and be the first to know about new publications