Brent and Wti crude prices suffered a great fall of the barrel two days ago. This situation caused a very large alert In the markets, since since February 2021 there was no such low data. After the storm, prices have stabilized around 60 dollars the barrel for the Trump measure of suspend for 90 days The highest tariffs to different countries. In this way, the commercial war has become A direct conflict against China that does not know the scope tariffs, leaving an economic paradox in reducing oil price.
Lowering prices. Until now, the United States has managed to reduce its commercial deficit thanks to the revolution of the shale, which has made the USA Net oil exporter Since 2020. This expansion prior to Trump’s second mandate had achieved reverse decades of foreign oil dependence. However, the impulse to pierce with the famous “Drill, Baby, Drill” Together with tariff policies, it has caused global uncertainty, According to PVM analyst Tamas Varga in Reuters.
There are no good ideas. And it is evident that Trump’s policies They lack a coherent direction. According to Reutersthe fall in crude oil prices is a reflection of the loss of confidence in American economic policy, especially in the middle of a commercial war, affecting the global demand for oil. Also, like He has stressed Energy expert Javier Blas, drilling and production costs are not profitable below $ 65 per barrel in the United States. In other words, if prices fall too much, production would decrease, which would force more oil and, therefore, would expand the commercial deficit, which is precisely what Trump wants to reduce.
The paradox. The contradiction in Trump’s policies is clear: its strategy of reducing oil prices to control inflation and stimulate the economy will have the opposite effect to the desired one. According to Blas explainedTrump’s objectives was precisely to reduce the commercial deficit. Before its presidency, the revolution of the shale, which allowed the United States to become a net oil exporter, was one of the factors that contributed significantly to improve the trade balance in the last two decades. However, by pushing prices at lower levels, Trump is running the risk of undoing the advances achieved, generating a macroeconomic imbalance that would seriously affect local production and increase import dependence. Besides, Anz Bank analysts in Reuters They expect that, if world economic growth falls below 3%, oil consumption could decrease 1%, which would further aggravate the situation.
Depending on oil. This Trump strategy also affects other countries than their income They are derived of the export of oil, such as Saudi and Russia Arabia. Although oil has experienced very significant fluctuations for more than five years, it is not even this commercial war when tensions have been exacerbated causing a strong fall.
This situation can cause a new layer of geopolitical tension. On the one hand, Saudi Arabia needs raw barrels to exceed $ 90 to continue building and investing in their macroprojects, Like Neom. On the other hand, the fall in prices in Russia has generated Even more pressure on its economy, which is already weakened by the Ukraine War.
Forecasts. As He has warned Javier Blas, “drilling, drilling, drilling” will not work if the barrel is 50 dollars and if the United States does not pierce, it must import it. In short, leaving a scenario in which the US president, in his attempt to control prices, can end up undoing the most effective tool he has had to reduce the commercial deficit in decades.
Image | Gage Skidmore and Unspash
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