Analysis: What's next for oil and gas prices after Putin-Trump summit? by Dr. DANIEL FINE USA-TODAY ENERGY MAGAZINE (FARMINGTON DAILY TIMES)

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THE FULL ARTICLE IS HERE--> https://www.daily-times.com/story/money/industries/oil-gas/2018/07/20/oil-and-gas-prices-after-putin-trump-summit-analysis/808906002/

 

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"The opposition in Congress wants to see a transcript of what President Donald Trump and Russian President Vladimir Putin talked about for two hours alone. No doubt some of that time was spent discussing OPEC and the price of oil."

 

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The opposition in Congress wants to see a transcript of what President Donald Trump and Russian President Vladimir Putin talked about for two hours alone. No doubt some of that time was spent discussing OPEC and the price of oil.

This is above all an issue now for the first time in world petroleum history because Russia has become part of OPEC in the agreement to manage world supply of oil and, indirectly, its price.

OPEC and Russia produce almost half of the supply of world oil. At full capacity, and spare capacity added in, they would be slightly over 50 percent. For now, OPEC plus Russia is the world price-setter for oil.

Shale and tight oil, mainly from the Southwest and North Dakota, along with conventional oil production in the United States, should account for 12 percent later this year if prices stabilize.

This was the reality of talk between Putin and Trump.

 

 

 

 

 

 

Russian President Vladimir Putin and U.S. President Donald Trump shake hands before a meeting in Helsinki.  Brendan Smialowski, AFP/Getty Images

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Putin, with OPEC, controls the price of world oil. America is not the price-setter: it is the price-taker.

But President Trump is the first U.S. President to take on OPEC. He has said that OPEC prices are “artificial” and as such violate free trade in oil.

This was true under the Obama presidency in 2014 when OPEC, following Saudi Arabia, set out to destroy shale oil producers in America in a price war against high-cost American producers by increasing production at a time of world-wide oversupply. 

Recall, the downturn in the San Juan and Permian basins.

Trump and Interior Secretary Ryan Zinke have made an energy policy of domination which now includes having an edge in price-setting. They want more oil even if it means lower prices as supply challenges demand.

No doubt, Trump explained this to Putin and inferred that Russia might leave its de facto membership in OPEC.

How would Putin reply, if asked by Trump? His reputation is such that he sees an opening and prompts Trump to consider ending some sanctions against Russia in oil exploration and production. Why not allow Russian oil companies to borrow to finance capital projects in Western banks? Why not re-open Exxon-Mobil Arctic oil joint projects? Is more Russian production of oil another way to lower oil prices at the pump and upend OPEC?