Donald Trump has no intention to collaborate with Russians in raising their oil output. The president of the United States did not approve bypassing U.S. sanctions against Russia for Exxon Mobile Corp. The corporation has been fighting for the approval of joint venture drilling for Russian oil since 2015, but failed completely. Ex-CEO of Exxon Mobile Rex Tillerson performed an intriguing part in the story about the joint venture. Mr. Tillerson has signed a cooperative plan with Rosneft in 2011; however, he left Exxon for Mr. Trump’s administration this January and did not endeavor to support the corporation. Did he abandon the oil industry forever? Did Mr. Tillerson have no interests in the oil market?
Russian president Vladimir Putin trusted his American friends, or those he has been considering as his friends until the spring 2017. Unfortunately for Mr. Putin, Donald Trump chooses rather to concentrate on the Keystone XL and the Dakota Access oil pipelines, because “America first”, and friends are OK when they don’t get in the way. The new oil pipelines will improve the conditions to deliver North American petroleum to port terminals and then to those who will be thirsty for energy resources. Meanwhile, Vladimir Putin proclaims his country as a defender of the Syrian government and a partner of Iranian oil producers. Russia recollects the eastern roots and even strengthens its eastern links, getting over the disappointment in the American friends. Besides the disappointment, Russians need to survive the delay or even the ruining of the future $500 billion investment plan over a span of decades.
Saudi Arabia understands the troubles American oil has brought to the market. Drilling activity of Washington pushes up reactivation of the rigs; the previous week U.S. rig count added 5. At the moment 688 rigs extract oil, while only 343 rigs worked in April 2016. Saudi Energy Minister Khalid al-Falih reminded that the cut off need to be extended in June, however the U.S. undermines the advantage of the OPEC-led deal. Riyadh is proud of Saudis’ good will and taking care of the stable oil market. Unfortunately, American president declared “America first” also in oil trading, and spoiled the script.
Previous week oil prices retreated below $50 per barrel, fell by almost 7%. Oil traders will take time to reconsider the news.