Trump criticizes OPEC, calls oil prices ‘artificially’ high

Gasoline prices across U.S. surge to highest level in 3 years.

HOUSTON — As domestic gasoline prices surged to their highest level in three years, President Donald Trump railed against the OPEC oil cartel Friday, declaring that the group was unjustifiably manipulating supplies for selfish gain.

He wrote on Twitter: “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!”

The Organization of the Petroleum Exporting Countries has been a target of derision by U.S. leaders since the Arab oil embargo of 1973 caused long lines at the pump and badly damaged the economy. But soaring production in the United States, Canada and a few other countries has reduced OPEC’s influence.

The renewed attention on OPEC comes as Saudi Arabia, the world’s largest oil producer, is cutting back exports to increase prices and add appeal to its proposed initial public offering of Saudi Aramco, the national oil company. At the same time, Saudi Arabia and others in the region have made an alliance of convenience with Russia, a non-OPEC member heavily dependent on oil revenues to finance its government. Together they have restrained production since 2016, reducing global stockpiles.

“Prices are high,” said Rob West, an analyst at Redburn, a London research firm. Noting that Trump may have a point, he added, “I do see some artificiality in the prices we see today.”

OPEC and non-OPEC producers gathered Friday in the Saudi city of Jiddah in an effort to continue the policy even as the price of Brent crude, the global benchmark, has climbed above $70, more than double the low point reached in early 2016.

The price of crude is the major reason American drivers are paying more at the pump as the summer driving season approaches. The average price for a gallon of regular gasoline Friday was $2.75 a gallon, according to AAA, up 19 cents over the past month and 33 cents from a year ago. It is the highest level since the summer of 2015.

The increase has been particularly noticeable during the past week, with prices in some states rising more than a penny a gallon every day.

Trump’s comments may have been informed by his new top economic adviser, Larry Kudlow, who has long viewed low gasoline prices as a beneficial stimulus. In a 2014 commentary for CNBC. com, he argued that lower oil prices would produce savings for households and businesses, freeing up money for consumers to spend. “All these factors will increase U.S. economic growth, not reduce it,” he wrote.

Deutsche Bank analysts warned this week that the rise in gas prices was beginning to cut into the disposable-income gains from the tax cuts Trump signed into law late last year.

OPEC makes an easy scapegoat for American politicians, even as the administration has worked hard to draw closer to Saudi Arabia in attempts to counter Iran and forge a settlement between Israel and the Palestinians.

But while OPEC’s actions have helped push oil prices higher, a litany of other factors have also played a role, including growing demand for gasoline and diesel in both developed and developing countries. Even as U.S. oil production continues to grow, worldwide inventories are declining. The International Energy Agency reported global oil supply eased by 120,000 barrels a day in March.

Much of the recent price increase is a result of growing geopolitical tensions — some related to Trump’s policies — that have bolstered investor expectations that oil prices could rise even higher.

Oil production is plummeting in Venezuela, the country with the largest reserves, and the expectation of stepped-up U.S. sanctions in the coming months could reduce its exports further. The threat that the United States could pull out of the nuclear deal with Iran has put the size of future Iranian exports in doubt.

Worsening tensions between Saudi Arabia and Iran have added to traders’ concerns. And the illness of a military power broker in Libya threatens more political turbulence and a reversal in the yearlong increase in Libyan exports.

A doubling of U.S. oil production in recent years, producing growing exports and a decline in imports, has helped stabilize the oil market and kept big price rises in check. But U.S. output represents only a bit more than 10 percent of the 98 million barrels a day produced worldwide.

The increase has been particularly noticeable during the past week, with prices in some states rising more than a penny a gallon every day.