Saudi Energy Minister told the president-elect that if he proceeds with his election promise to block all imports of oil from OPEC, he could jeopardize the global as well as the U.S. economy.
During the months of campaign trail, Donald Trump promised to free the United States from the energy dependence of "our foes and the oil cartels", mainly referring to the Organization of Petroleum Exporting Countries, of which Saudi Arabia is the biggest supplier. Now that Trump's victory in this year's presidential election is clear, the oil producers are getting anxious about the future of the industry.
Earlier this week, Saudi Energy Minister Khalid al-Falih "reminded" Donald Trump that completely blocking the oil imports would undermine U.S. domestic economy, adding that the United States “benefits more than anybody else from global free trade”, reports Financial Times.
“At his heart President-elect Trump will see the benefits and I think the oil industry will also be advising him accordingly that blocking trade in any product is not healthy,” Khalid al-Falih told Financial Times in an interview.
Saudi Arabia is currently the U.S. biggest foreign oil supplier, although the American "shale boom" has made the U.S. the third biggest crude oil producer in the world. Forbes reported that Saudi Arabia had an 11% market share in the United States and generously invested in American oil refineries over the last years to support the oil industry. In total, OPEC accounts for 31% of all U.S. oil imports whereas Canada has a 41% market share. These numbers show that Trump's pledge of “complete American energy independence” could seriously shake up this highly interconnected industry.
“The U.S. is sort of the flag-bearer for capitalism and free markets. The U.S. continues to be a very important part of a global industry that is interconnected, that is dealing with a fungible commodity which is crude oil. So having equalization through free trade is very healthy for oil,” al-Falih added.
Financial Times mentions al-Falih saying that Saudi Arabia is waiting for Donald Trump to take the office in January as his presidential campaign amounted to “50,000 feet announcements” that might as well change when he becomes the president.
However, for Saudis, after being hit hard from plummeting oil prices in the last 2 years, losing one of its main supply markets would mean deeper budget deficits and more conflicts in the bloc.