Such was the case when, in a speech at the World Economic Forum in Davos on 23 January, US President Donald Trump demanded that the Organisation of Petroleum Exporting Countries (OPEC) increase production of crude oil in order to bring down its global prices.
“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,” the president said. “That didn’t show a lot of love by them not doing it. I was a little surprised by that.”
Those remarks signalled an apparent new energy policy agenda adopted by Washington, reportedly having a two-pronged approach. Firstly, it aims to make the US an energy-independent nation, allowing it to be less reliant on oil and other energy resources from key suppliers like the Gulf Arab states.
Secondly, the new policy aims to make oil prices a key bargaining chip in negotiations for a ceasefire and political resolution to stop the ongoing war between Russia and Ukraine. “If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue,” Trump said.
The logic of that strategy seemingly lies in the $60-per-barrel oil price cap that G7 nations imposed on Russian crude exports back in 2022, which aimed to prevent ship owners, insurers and those involved in the transport of such exports from facilitating the movement of any Russian oil above that threshold. Moscow has reportedly been able to circumvent such measures through a myriad of methods, however, making it difficult for the US and Western nations to pressure Russia’s economy on that front.
“Russia is gaining billions of dollars of money from oil sales,” according to Keith Kellogg, the Trump administration’s special envoy for Ukraine and Russia, in an interview with Fox News last month after the new president’s comments at Davos. “What if you drop that to $45 per barrel, which is basically a baseline breakeven point?”
Both those goals by the Trump administration essentially go hand-in-hand, with the attempt to drastically lower oil prices being seen by Washington as potentially boosted by the increase of domestic oil exploration and production.
That domestic target, however, has baffled many analysts due to the simple fact that to increase oil output at home while lowering global prices would seemingly backfire on those domestic oil companies, which would find it increasingly difficult to make a profit with oil prices lower than $50 per barrel – especially due to the fact that US companies largely produce a barrel of crude at a cost of between $25 to $40.
OPEC states, on the other hand, particularly Gulf states such as Saudi Arabia, reportedly can still produce a barrel at less than $10. That means if there were to be a sharp increase in production and a lowering in global prices, the Gulf and OPEC states would be able to sustain their profits while American companies would suffer, at least in the short-term.
Trump’s battle for control of oil prices, however, is larger than simply a desire to see America have its own energy influence to throw around or a need to resolve the war in Ukraine, but can notably be seen as just one front in the US’s battle to assert American primacy on the world stage and to rail against any show of strength by the ‘Global South’.
Other fronts in that pending war against Global South unity include the president’s condemnation of BRICS and the looming threat of ‘dedollarisation’, at a time when that group of emerging economies apparently worries his administration and its efforts to strengthen the US dollar and wider national economy.
Trump has responded over the past few months with direct threats of 100 per cent tariffs against those BRICS members who attempt to set up a currency for the bloc, warning of economic warfare “if they want to play games with the dollar”.
The US’s perceived rivals, it seems, are growing. For years, Russia has been treated by Washington as a geopolitical and military adversary, while China has been treated as a trade and economic competitor. Now, under the Trump administration, that purview is being extended to new fields, with UN and international agencies being dealt with as legal obstacles, and OPEC being classified as a challenge to US energy independence.
Within that frame, even the Gulf Cooperation Council (GCC) states are seemingly not safe from the eye of Trump. While there is not yet any tangible tension between Washington and the Gulf Arab states, particularly Saudi Arabia, there are emerging signs of a potential rift in relations in the near future.
They are actively attempting to avoid that, and although Saudi Arabia and its OPEC partners and allies are unlikely to release more oil into the market and follow Trump’s instructions step by step, the kingdom – like many US allies who try to maintain diplomacy under the wild ebbs and flows of Trump rule – has placated the US by pledging the investment of $600 billion into the country and working with the current administration in its talks with Russia.
Nevertheless, Riyadh seems unafraid to oppose Washington in any attempts to dominate the kingdom’s energy policies, and will likely only cooperate with proposals that also benefit itself economically.
The Gulf state may also be pushing for a renewed attempt to revive efforts for a new defence pact with the US, in return for such demands by the Trump administration to influence the oil markets, particularly after Riyadh was forced to abandon pursuing a defence treaty under the former Biden administration last year.
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