Trump Pressures OPEC and Putin to Lower Oil Prices, Aims to End Ukraine War

Oil prices experienced a slight increase on Friday but concluded the week with a decline, marking the end of four consecutive weeks of gains. This shift follows President Trump’s announcement of major initiatives to boost domestic production and his renewed demand for OPEC to reduce crude prices.

Price Movements Brent crude futures rose by 21 cents (0.27%), closing at $78.50 a barrel, while U.S. West Texas Intermediate (WTI) crude saw a minor increase of 4 cents (0.05%), ending at $74.66. Despite these gains, Brent recorded a 2.8% decrease for the week, with WTI dropping 4.1%.

Trump’s Stance on OPEC President Trump reiterated his call for the Organization of the Petroleum Exporting Countries (OPEC) to lower oil prices, highlighting the impact on oil-rich Russia’s finances and the ongoing war in Ukraine. Trump believes that lowering oil prices by increasing OPEC output will force Russia to end the war in Ukraine. During a visit to North Carolina, Trump emphasized the urgency of OPEC’s role in bringing down prices.

National Energy Emergency On Monday, Trump declared a national energy emergency, rolling back environmental restrictions on energy infrastructure to maximize domestic oil and gas production. These rollbacks could support oil demand but have the potential to exacerbate oversupply.

Potential Sanctions Impact and Tariffs Trump’s potential U.S. sanctions on key oil producers like Russia and Iran pose a challenge to his objective of reducing energy costs. Trump is relying on OPEC to compensate for any resulting supply gaps. Despite Trump’s demands, OPEC+ (which includes Russia) has yet to adjust its existing plan to raise oil output starting in April.

In addition to OPEC-related discussions, Trump announced plans to impose tariffs on the European Union, Canada, and Mexico. He also mentioned considering a 10% punitive duty on China. As attention shifts to a possible February timeline for new tariffs, market caution is likely to persist due to potential negative implications for global growth and oil demand prospects.

Market Reactions Bullish catalysts, such as a significant drawdown in U.S. crude stocks, are providing temporary positive swings, but an over-supplied global market and projections of ailing Chinese demand continue to weigh on crude futures. U.S. crude inventories last week hit their lowest level since March 2022, according to the U.S. Energy Information Administration.

Trump’s Strategy and Putin’s Response Despite a strong push to lower oil prices, the Kremlin has dismissed Trump’s threats of additional sanctions. During a speech at the World Economic Forum in Davos, Trump called on Saudi Arabia and its allies in OPEC to increase oil output, so that crude prices would fall, reducing the revenue for Moscow to fund its war in Ukraine.
“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. I was a little surprised by that. If the price came down, the Russia, Ukraine war would end immediately,” Trump said.
During the 2024 presidential campaign, Trump made ending Russia’s three-year full-scale invasion of Ukraine a priority and has been seeking to meet with Putin since winning election in November. However, Putin believes he is winning the war and remains reluctant to engage in talks.

Russia has been gaining territory in Eastern Ukraine rapidly since the start of the war, as Ukraine struggles to recruit troops. A day after his inauguration on January 20, Trump announced plans to impose more sanctions on Russia to pressure it into negotiations without specifying exact targets. The Kremlin ignored these warnings, with spokesman Dmitry Peskov claiming there were no new elements in Trump’s comments.

Saudi Arabia’s Role

Saudi Arabia and some of its allies in OPEC have the capacity to boost oil output quickly, with Saudi Arabia holding a spare capacity of about 3 million barrels a day and the United Arab Emirates (UAE) having about 1 million barrels. Yet, it remains uncertain whether Saudi Arabia will engage in such a political move against fellow OPEC+ member Russia or take actions that could reduce its export earnings and increase market share for U.S. producers.