U.S. President Donald Trump hasn’t been able to get Kremlin leader Vladimir Putin to agree to talks to end the war in Ukraine so he is turning to Saudi Arabia for help.
During a January 23 speech to the global business elite gathered at the World Economic Forum in Davos, Switzerland, Trump called on Saudi Arabia and its allies in OPEC to ramp up oil output, a move that would push down crude prices, choking a key revenue source for Moscow to fund its war.
“I’m also going to ask Saudi Arabia and OPEC to bring down the cost of oil. You got to bring it down, which, frankly, I’m surprised they didn’t do before the election. I was a little surprised by that. If the price came down, the Russia, Ukraine war would end immediately,” Trump said.
During his 2024 presidential campaign, Trump made ending Russia’s three-year full-scale invasion of Ukraine a priority and has been seeking to set up a meeting with Putin since winning election in November.
However, the Kremlin has seemingly refrained from entering talks with analysts, saying Putin believes he is winning the war and thus sees no reason to stop the fighting.
Russia has been gaining territory in eastern Ukraine at the fastest clip since the start of the war as Ukraine struggles to recruit troops.
A day after he was inaugurated as president on January 20, Trump said he would impose more sanctions on Russia to get it to the table without saying what exactly he would target.
He reiterated the warning the next day, but Kremlin spokesman Dmitry Peskov said on January 23 — before Trump spoke in Davos — that Moscow “did not see any particularly new elements here” in what Trump said.
Under Trump’s predecessor, Joe Biden, the United States imposed sweeping sanctions on Russia’s economy, including its oil industry.
Russia’s economy is heavily dependent on the export of oil, which accounts for more than 30 percent of its federal budget revenue. A decline in either Russian oil exports or the oil price would further strain the country’s already troubled economy.
However, further sanctioning Russia’s oil industry — such as designating its largest oil company Rosneft or more of its ‘shadow’ oil fleet — could lead to a jump in global energy prices unless other countries ramp up output.
Saudi Arabia and some of its allies in OPEC are capable of boosting oil output quickly. Saudi Arabia currently has spare capacity of about 3 million barrels a day while the United Arab Emirates (UAE) has about 1 million barrels.
The spare capacity is the result of OPEC countries agreeing to crucial output to support high oil prices.
Russia, a member of OPEC+, exports about 6.6 million barrels of oil and oil products a day.
Prior to his speech to WEF participants, Trump spoke with Saudi Arabia’s crown prince in his first call with a foreign leader since taking office earlier this week.
The two discussed Middle East stability, combating terrorism, and boosting trade, according to a White House read out of the call.
Chris Weafer, an oil industry expert and founder of the Macro-Advisory consulting firm, said he did not think Trump would be able to get the Saudis or other OPEC members to boost output to pressure the Kremlin on Ukraine.
“It is most unlikely that Saudi Arabia, the UAE, or the other OPEC producers will either want to engage in such a political move against fellow OPEC+ member Russia or to take any action which would result in them losing export earnings and giving a bigger market share to U.S. producers,” Weafer told RFE/RL.
“OPEC producers are still angry at the total disregard from Washington when the shale revolution boosted U.S. crude production and exports, taking market share from them,” he said.
David Oxley, chief climate and commodities economist at Capital Economics, said that while Saudi Arabia “has drifted away” from the United States in recent years, Trump does have solid ties with the country’s leadership.
“There have been signs of warming relations of late, and Trump is known to have good relations with Crown Prince MBS and also Saudi’s Public Investment Fund,” Oxley said in a January 23 note.
He added that Saudi Arabia has also expressed frustration with other OPEC members for producing more than their quota and could “open the floodgates” to regain global market share.
“This explicit invitation from Trump might be the cover that Saudi needs to open the spigots,” he said.
Story By oilprice.com
