Trump thanks Saudi Arabia for low oil prices after letting it off the hook for Khashoggi murder

The day after President Donald Trump released a statement saying he will stand by Saudi Arabia despite evidence its leadership was behind the murder of journalist and dissident Jamal Khashoggi in October, he fired off a tweet thanking the country for low oil prices.

Trump on Wednesday morning tweeted that the price of crude oil, which is currently at about $54 a barrel, is getting lower, down from $82 in September. “Thank you to Saudi Arabia, but let’s go lower!” Trump wrote.

Trump’s Tuesday statement saying he would essentially give Saudi Arabia a pass on Khashoggi’s murder likely contributed to the dip in oil prices, which fell by about 7 percent on Tuesday to the cheapest level since October 2017.

In sending off his celebratory tweet on Wednesday morning, Trump is revealing what appears to be his calculus for letting the Saudis off the hook. Saudi Arabia, a founding member of OPEC, has historically been able to exert a lot of control over oil markets and prices worldwide. It can push oil prices higher and lower by changing outputs or, sometimes, even just considering it.

“What’s at stake is global oil price stability,” Ashley Petersen, a senior oil market analyst at energy advisory firm Stratas Advisors, recently told me. “Saudi Arabia excels at talking up and talking down the oil market. They could theoretically cause enough trouble just by hypothetically running scenarios out loud versus physically changing their flows.”

Trump told reporters on Tuesday that breaking with Saudi Arabia would cause oil prices to “go through the roof.” He took credit for keeping prices down and said the Saudis had “helped” him.

As Tom DiChristopher at CNBC explained, the cost of oil started to rise earlier this year when the Trump administration got ready to put sanctions back on Iran, which is OPEC’s third-largest oil producer. The US has not yet shut down Iranian oil exports and has issued temporary waivers to China, India, and other countries that get oil from Iran.

Trump earlier this month discouraged Saudi Arabia and OPEC for cutting oil production, saying that prices should be “much lower based on supply.”

He might not get his way: According to a report from Reuters, OPEC and its partners are prepping to cut oil production by 1.4 million barrels per day when they meet in Vienna, Austria, in December. The cut in production could push prices up again.

Trump’s Wednesday tweet, accompanied by his Tuesday statement and remarks, makes clear that he has no intention of doing anything about the Saudis as long as he gets what he wants from them. It’s something he’s been signaling all along; after Khashoggi’s disappearance, he made inflated claims about jobs created by a Saudi arms deal and emphasized that Saudi Crown Prince Mohammed bin Salman denied involvement in the incident.

With the stock market becoming tumultuous as of late and giving back its 2018 gains, Trump appears to now be indicating that he prefers a new benchmark as a measure of his presidency: oil prices. That keeps gas prices low, which appears to be what he’s gunning for, though low prices aren’t exactly stellar for the US.

As Rebecca Elliott at the Wall Street Journal notes, low oil prices could limit US oil growth next year. They could also be a drag on the economy because low oil prices can force oil companies to cut back spending.

If the Saudis were to cut production, the US now has the ability to ramp up its production. And it would actually become more economically viable for US producers, including frackers, to do so as oil prices go up. If they were to flood the market, American producers are better able to handle low oil prices than the Saudis.

Whatever the dynamic of the global oil markets, Trump is sending a clear and unabashed signal to the Saudis: Do whatever you want, as long as you’re with me in my political priorities.