Publications: Notes at the Margin

The Long-Term Implications of Trump's Oil Tweets (March 4, 2019)


The impact of the Trump Call can be observed in data and events. The data reveal that those who might participate in the oil market by taking long positions in futures or by providing capital to the industry now treat oil as a pariah. Recent events, particularly discussions by oil executives last week, suggest an increasing sense of panic is spreading across big and small firms. Officials who once believed they commanded the world from on high when meeting with finance industry representatives now find that they cannot get their calls answered by the newest intern at these firms. In effect, a tourniquet is being applied to the investment plans of oil companies. Today, most oil firms are unable to turn to capital markets to raise the funds needed to make the supply additions many believe are required. Donald Trump’s tweets against OPEC and the uncertainty regarding future oil prices bear much of the responsibility for this situation.


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