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Investing.com - U.S. President Donald Trump has called for a surge in oil production to help tamp down inflationary pressures, but has faced pushback from his allies in the U.S. shale industry and Saudi Arabia, according to the Wall Street Journal.
Citing oil executives, the WSJ reported that, even if Trump moves to wipe away many regulations on the energy sector, an American oil boom is unlikely to transpire as companies focus on reining in costs and returning cash to shareholders.
People who advise Trump have also conceded that U.S. fracking businesses will not pump more, sources familiar with the matter told the WSJ. Trump’s best chance to lower oil prices would be to persuade the Organization of the Petroleum Exporting Countries, and its de facto leader Saudi Arabia, to increase supply, the WSJ reported.
But Saudi Arabia in particular has let former U.S. officials know that it is not willing to expand global oil supplies, the WSJ report said, adding that this message has been passed on to Trump’s team. A clash is looming between Trump and Saudi Arabia over oil prices, one of the former officials told the WSJ.
Last month, Trump, who is planning a visit to the kingdom in one of his first foreign trips since his return to the White House, suggested that he would ask Riyadh and other OPEC nations to help lower oil prices.
Trump has been keen to decrease energy costs in the hopes that it will dampen inflation in the U.S. and boost the case for the Federal Reserve to roll out more interest rate cuts, the WSJ said. It added that the trend could bolster Trump’s negotiating position ahead of talks with leaders from key oil producers Russia and Iran.
Indeed, Trump’s special envoy to Ukraine and Russia has suggested global producer should move to reduce oil prices down to $45 per barrel from their current level of around $73 a barrel. However, U.S. frackers and Saudi Arabia could be hit hard by such a decline, the WSJ reported.