- Russia and OPEC will not increase oil production in the near future
- U.S. President Donald Trump asked OPEC to increase oil production on Thursday
- The move could trigger political backlash in the U.S.
Russia and the Saudi-led Organization of Petroleum Exporting Countries (OPEC) on Sunday ruled out increasing crude oil production days after U.S. President Donald Trump called on the petrostates to “get prices down now.”
Saudi Energy Minister Khalid al-Falih said that while OPEC would move towards “100 percent compliance” by making up for collapsing production in Venezuela if the demand was there, he had “not seen demand for any additional barrel that we did not produce.”
“My information is that the markets are adequately supplied. I don’t know of any refiner in the world who is looking for oil and is not able to get it,” Falih said, according to Reuters. (RELATED: No One Wants To Buy The Western US’s Largest Coal Plant)
Likewise, Russian Energy Minister Alexander Novak signaled there would be no immediate increase in oil production. Russia and Saudi Arabia, two of the three biggest oil-producing nations, have been working together to raise oil prices for the past couple of years.
Trump railed against OPEC Thursday for continuing to “for higher and higher oil prices,” imploring the crude cartel to “get prices down now!”
We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!
— Donald J. Trump (@realDonaldTrump) September 20, 2018
Rising crude oil prices put pressure on U.S. gas prices, pushing the average price per gallon up around 30 cents from 2017, according to the American Automobile Association (AAA). Renewed economic growth, refinery outages from Hurricane Harvey in 2017 and economic sanctions on Iran have contributed to the price rise.
In light of OPEC and Russia refusing to increase output, analysts expect global oil demand to exceed supply in the near term.
But that upward pressure on prices could galvanize support behind legislation to label OPEC a cartel under anti-trust law, according to analysts at ClearView Energy Partners LLC.
“Rising prices could catalyze congressional passage of the No Oil Producing and Exporting Cartels Act (NOPEC Act), which would allow federal prosecution of OPEC as a cartel under the Sherman Antitrust Act,” ClearView analysts said in a report issued Sunday.
The NOPEC Act, introduced by a bipartisan group of lawmakers in May, would remove OPEC’s immunity under current federal law. That would allow OPEC to be sued for violating the Sherman Antitrust Act.
“We therefore reiterate risk of a Congressional ‘stampede’ towards passage of NOPEC, perhaps in response to further tweets,” ClearView analysts said in their report.
“Not only does NOPEC appear to have White House and Justice Department backing, but we would reiterate that, on average, voters in the ‘at-risk’ states to be contested in this year’s Senate elections exhibit relatively high exposure to gasoline price increases,” reads the report.
Should prices get high enough, Trump could order oil released from the Strategic Petroleum Reserve (SPR), which may briefly stabilize prices.
However, Energy Secretary Rick Perry ruled out using the SPR when asked by The Daily Caller News Foundation in June. Perry said the SPR is for emergencies and not to manipulate markets.
“It’s there for emergencies,” Perry told TheDCNF. “We’re going to do everything we can in our country to keep gasoline prices reasonable.”
“Our role is to get out of the way of the private sector,” Perry said.
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