Clayton Seigle
President Trump’s two-day visit to Saudi Arabia is expected to focus on bilateral deals, including a Saudi pledge to invest $600 billion in the United States. Cooperation on arms deals and a civil nuclear program for Riyadh are said to be on the agenda. Trump and his host, Crown Prince Mohammed bin Salman, will surely also discuss regional hot spots, including Gaza, Yemen, and Iran.
But even before leaving Washington, Trump had already secured an important win from Riyadh in the form of extra crude oil that has contributed to a drop in oil prices.
The oil market was surprised in early April when a subset of eight members of the OPEC+ (Organization of the Petroleum Exporting Countries) producer group announced it would be increasing supply at triple the previously expected rate. That’s because the Saudi-led coalition had worked assiduously for more than a year to keep supply tight—twice postponing a program to very gradually add barrels until the market was strong enough to support the move.
Suddenly, in early April (just as financial markets were reeling from the trade war), the producer group announced it would be hiking May output by 411,000 barrels per day—three times the volume it had previously publicized. And just last week, it doubled down, maintaining the faster supply rate for June.
What explains the about-face from the Saudi-led group that has helped sink oil prices?
Pundits have offered uncompelling justifications, such as punishing Kazakhstan and Iraq for “cheating” on their production quotas. But the more likely explanation is the simplest—to curry favor with Trump at relatively low cost.
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