U.S. President Donald Trump has warned its Middle Eastern ally Saudi Arabia that the family of King Salman would not last “two weeks" without the backing of the U.S. military.
The U.S. president’s statements made at an election rally before the oncoming U.S. midterm elections seem to be an effort to pressure Riyadh to act on the rising cost of crude oil. Trump also called on the kingdom to increase its defence budget or face an uncertain future.
Speaking at a campaign rally in Mississippi, Trump said, "I love the king, King Salman, but I said - 'King, we're protecting you. You might not be there for two weeks without us. You have to pay for your military, you have to pay."'
Trump had called on Saudi Arabia, before the scheduled Organisation of the Petroleum Exporting Countries (OPEC) meeting last month to increase production of crude oil so that prices cool down. However, the meeting did not result in any such decision.
Moreover, the U.S. has imposed sanctions on Iran after withdrawing from the 2015 nuclear deal and Iran’s crude oil production is expected to take a hit from November this year. Based on these supply disruption factors and the lag time associated with OPEC’s ability to increase production, analysts are estimating that oil prices could rise up to $100 a barrel by the end of this year or starting next year. Meanwhile, the oil prices today are – West Texas Intermediate crude is trading at $74.30 and Brent Crude is at $86.24.
At last week's United Nations General Assembly, Trump had criticised oil producers, saying that the Organisation of the Petroleum Exporting Countries are ripping off the world. "Opec nations are, as usual, ripping off the rest of the world and I don't like it," he said. "Nobody should like it. We defend many of these nations for nothing, and then they take advantage of us by giving us high oil prices. Not good. We want them to stop raising prices. We want them to start lowering prices and they must contribute substantially to military protection from now on."
However, not everyone is impressed by Trump’s apparent bullying tactics. Russian President Vladimir Putin said his American counterpart’s Iran sanctions are largely to blame for current high oil prices.
“President Trump considers that the price is high; he’s partly right, but let’s be honest,” Putin said at the Russian Energy Week conference in Moscow on Wednesday. “Donald, if you want to find the culprit for the rise in prices, you need to look in the mirror.”
The Russian leader pushed back against escalating criticism of OPEC and its allies, which Trump has blamed for Brent crude’s rise to a four-year high near $85 a barrel.
Putin said his country has already boosted output and has the capacity to add another 200,000 to 300,000 barrels to the market.
Saudi Arabia is yet to respond to Donald Trump’s comment but seems to be listening to the message. Bloomberg reports that Riyadh has “significantly” raised production to a near-record level of 10.7 million barrels a day, Energy Minister Khalid Al-Falih told reporters at the Moscow meet.