The price of crude oil is down just a tick since yesterday. West Texas Intermediate crude oil is trading for US$73.09 per barrel.
That’s still close to three-year highs. And still 20% higher than where we expect oil to be as we head into September.
US President Donald Trump, for one, isn’t happy with the high prices US voters are paying to fill up their cars. Not only does he want to appear to be doing something to help them. He wants to ensure petrol prices come down before the US mid-term elections in November.
If Republicans can maintain their majority in the Senate and Congress, Trump will wield even greater power in his second two years in office. Not to mention that his risk of impeachment pretty much goes out the window.
It’s not surprising, then, that Trump is upping the pressure on OPEC. You can see his latest reaction on Twitter below:
You can’t even label this a thinly veiled threat.
Saudi Arabia appears to already have gotten the message. Though it’s unclear if the kingdom will end up pumping up to an extra two million barrels of oil per day, as Trump is demanding.
In his latest tweet, Trump is directly warning other OPEC members — Kuwait, Iraq, and the United Arab Emirates come to mind — that they could lose vital US military aid if they don’t follow the Saudi’s lead.
There’s been no official reply from OPEC yet. But without US military backing, many of these nation’s governments will find themselves on very thin ice.
Then there’s Russia, the world’s third largest oil producing nation after the US and Saudi Arabia.
Trump’s upcoming summit with Putin will almost certainly involve oil talks. And with Putin eager to cosy up to the US president, we expect more Russian oil to hit the markets.
The bottom line — oil looks set for a big fall.
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