The Trump Administration Can't Have It All When It Comes To Oil

&l;p&g;Oil prices are rising and the Trump Administration is going to have to decide between its foreign policy goals and low oil prices for consumers.&l;/p&g;&l;figure class=&q;image-embed embed-0&q;&g;&l;div&g;&l;img src=&q;https://specials-images.forbesimg.com/imageserve/1131323607/960x0.jpg?fit=scale&q; alt=&q;AZERBAIJAN-OPEC&q; data-height=&q;3000&q; data-width=&q;4590&q;&g;&l;/div&g;&l;figcaption&g;&l;fbs-accordion&g;&l;p class=&q;color-body light-text&q;&g;Saudi Arabia&s;s Energy Minister Khalid al-Falih chairs the 13th meeting of the Joint Ministerial Monitoring Committee (JMMC) of OPEC and non- OPEC countries in Baku on March 18, 2019. (Photo by Mladen ANTONOV / AFP) (Photo credit should read&l;small&g;AFP/Getty Images&l;/small&g;&l;/p&g;&l;/fbs-accordion&g;&l;/figcaption&g;&l;/figure&g;&l;p&g;The U.S. oil benchmark, WTI, is near $60 per barrel, and the international benchmark, Brent, is closing in on $70 per barrel. Gasoline prices in the United States are also on the rise. According to GasBuddy, the &l;a href=&q;https://business.gasbuddy.com/march-madness-sets-in-at-gas-pumps-across-the-us/&q; target=&q;_blank&q; class=&q;color-accent&q;&g;average price&l;/a&g; of gasoline across the country has just seen its fifth straight week of increases and is now $2.54 per gallon.&l;/p&g;&l;p&g;U.S. production is still going strong at 11.9 million barrels per day, &l;a href=&q;https://www.eia.gov/outlooks/steo/&q; target=&q;_blank&q; class=&q;color-accent&q;&g;according to the EIA&l;/a&g;, but this isn&s;t impacting the oil markets. Right now, the signs are pointing towards tighter oil supplies ahead.&l;/p&g;&l;fbs-ad position=&q;inread&q; progressive&g;&l;/fbs-ad&g;&l;p&g;OPEC and its non-OPEC partners just pledged to pick up the pace on their production cuts. &l;a href=&q;https://www.reuters.com/article/us-saudi-oil-exports/saudi-arabia-to-cut-oil-exports-in-april-saudi-official-idUSKBN1QS0SN&q; target=&q;_blank&q; class=&q;color-accent&q;&g;Saudi Arabia&l;/a&g; said it will produce only 9.8 million barrels per day in March and April, which is well below its quota of 10.3 million barrels per day. Russia, which has been delinquent on its promised production cuts, pledged to finally follow through this spring and summer. Iraq, which regularly overproduces its quota, also &l;a href=&q;https://www.spglobal.com/platts/en/market-insights/latest-news/oil/031819-opec-cancels-april-meeting-on-steady-market-outlook&q; target=&q;_blank&q; class=&q;color-accent&q;&g;committed&l;/a&g; to cutting production by 200,000 to 250,000 barrels per day over the next several months. Another &l;a href=&q;https://www.spglobal.com/platts/en/market-insights/latest-news/oil/031819-kazakhstan-will-comply-with-with-promised-oil-output-cuts-as-giant-kashagan-field-shuts&q; target=&q;_blank&q; class=&q;color-accent&q;&g;big cut&l;/a&g; will come from Kazakhstan, which plans to shut its Kashagan oil field for maintenance in April and May. This will remove at least 200,000 barrels per day from the market until production resumes in June.&l;/p&g;&l;p&g;On top of this, the Trump Administration&s;s &l;a href=&q;https://www.reuters.com/article/us-venezuela-politics-usa-abrams/u-s-envoy-says-venezuela-oil-production-dropping-steadily-idUSKCN1QW2HM&q; target=&q;_blank&q; class=&q;color-accent&q;&g;sanctions&l;/a&g; on Venezuela have brought that country&s;s oil production down to just 1 million barrels per day. However, tighter sanctions and electricity outages make further drops likely. The Trump Administration&s;s sanctions on Iran have also cut that country&s;s oil production. Iran&s;s oil exports are now just below 1.5 million barrels per day, according to &l;a href=&q;https://tankertrackers.com/news/crude-oil-exports-report/iran-february-2019&q; target=&q;_blank&q; class=&q;color-accent&q;&g;TankerTrackers.com&l;/a&g;, but the &l;a href=&q;https://www.reuters.com/article/us-usa-sanctions-iran-oil-exclusive/exclusive-u-s-aims-to-cut-iran-oil-exports-to-under-1-million-bpd-from-may-sources-idUSKCN1QU35V&q; target=&q;_blank&q; class=&q;color-accent&q;&g;State Department&l;/a&g; says it wants to bring this number down below 1 million barrels per day in May.&l;/p&g;&l;div class=&q;vestpocket&q; vest-pocket&g;&l;/div&g;&l;p&g;The Trump Administration continues to sing a familiar refrain when asked about restricting Venezuela and Iran&s;s oil exports - that there&s;s room in the oil market to push its oil sanctions more aggressively. Specifically, an administration official, referenced a &l;a href=&q;https://www.cnbc.com/2019/03/13/us-thinks-it-can-be-more-aggressive-in-taking-iran-oil-exports-to-zero.html&q; target=&q;_blank&q; class=&q;color-accent&q;&g;forecast&l;/a&g; that predicted supply would outpace demand by 400,000 barrels per day in 2019. The problem is that between Saudi Arabia, Iraq, Kazakhstan and Venezuela, those 400,000 barrels per day will be off the market by April. This leaves the Trump Administration with a choice between pressuring Iran and higher oil prices for American consumers.&l;/p&g;&l;p&g;The President may try to pressure Saudi Arabia to increase its production—a tactic that worked last year. But after oil prices took a nose dive when Trump suddenly granted exemptions for imports of Iranian oil by China, India and others, the President is unlikely to find a sympathetic ear in Saudi Arabia this time. U.S. oil production is strong, but the type of oil produced in the Permian can&s;t be used as a substitute for Venezuela&s;s and Iran&s;s heavy oil exports.&l;/p&g;&l;p&g;Very soon, the Trump administration is going to have to choose between pursuing its foreign policy goals in Iran and Venezuela and ensuring low oil and gasoline prices for American consumers and manufacturers. The administration can&s;t have it both ways in today&s;s oil market.&l;/p&g;&q;,&q;bodyAsDeltas&q;:&q;