On Saturday, April 4, 2020, US President Donald Trump said he would impose tariffs on crude imports as a measure to “protect” US energy workers. The global oil price crisis gets worse due to disputes over the output cutting between the two major producers, Russia and Saudi Arabia which has also affected the oil industry in the US.
Nevertheless, some key American oil companies reminded the Trump administration that the ban on imports would have a fierce impact on the companies that depended upon the supply of crude oil overseas.
Trump’s Plans to Curb Imports
Globally, oil prices dropped by about two-thirds this year since the demand for oil worldwide has been sharply declined as the virus pandemic has forced governments to put restrictions on movements and travels of people.
Amid the sharp drop in the global demand for oil, the crisis deepened as there were conflicts between the two key producers in terms of boosting output in the market. Meanwhile, the US in recent years has become the world’s biggest oil producer, aiming at a tough competition with Russia and members of the Organization of the Petroleum Exporting Countries, or OPEC.
In a briefing related to the widespread coronavirus outbreak in the US, Trump stated, “If I have to do tariffs on oil coming from outside or if I have to do something to protect our … tens of thousands of energy workers and our great companies that produce all these jobs, I’ll do whatever I have to do.” With the prevailing challenges of global oil prices, many US energy companies are facing bankruptcies and problems of laying off their massive workers.
Meanwhile, two major industry groups, the American Petroleum Institute, and American Fuel & Petrochemical Manufacturers stated in a letter to Trump that new tariffs on oil imports would harm those domestic refining businesses that are dependent on crude oil supply from abroad. On Friday, after meeting with industry executives, Trump said tariffs were an option “if we’re not treated fairly.”
US Concerns on Russia-Saudi Oil Disputes
Saudi Arabia-led OPEC and Russia have been broiled over the issue of deep cut of oil output in the global market but failed their negotiations. OPEC sources said the meeting between the two major oil producers to discuss oil output cuts has been postponed until April 9.
According to the US Energy Information Administration, “The US imported more than 1 million barrels per day of oil from Russia and Saudi Arabia combined in 2019.” When the global oil prices started dipping last month, Trump initially stated that this would benefit motorists. On Saturday, Trump warned that, if gasoline prices could fall to 90 cents a gallon then the oil price crash would “hurt a lot of jobs in our country.”
On Saturday, Trump claimed that Saudi Arabia and Russia had agreed with the US to jointly reduce output by an unprecedented 10 million barrels per day or more. However, it was not yet confirmed the news from the countries despite Trump’s claims but the leaders of the countries had earlier considered a plan to discuss ways to stabilize global oil markets.
Citing the global oil price crisis was exacerbated due to Russia-Saudi disputes, Trump exclaimed that the de facto OPEC leader Saudi Arabia and Russia would be “destroying themselves” if they continued their disputes regarding the reduction of output. Trump also added, “I couldn’t care less about OPEC,” considering the impact of the oil crisis.
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