Business

Trump threatens tariffs if needed to protect oil industry

Trump threatens tariffs if needed to protect oil industry

Washington: President Donald Trump ramped up his threats to impose oil import tariffs as renewed diplomatic tension between Saudi Arabia and Russia threatens efforts to reach a new deal to cut output.

Trump said Saturday at a White House press briefing he’d use tariffs if needed to protect the domestic oil industry, a day after meeting with U.S. industry leaders. A gathering of OPEC and other major producers scheduled for Monday was delayed until later in the week as Saudi Arabia and Russia traded barbs about who’s to blame for the collapse in crude prices.

Optimism over prospects for a deal sent benchmark oil futures to a record gain this week, despite an unprecedented global demand loss from the Covid-19 outbreak. A failure to come to an agreement would likely cause prices to crater again. The U.S. oil industry is split on the idea of tariffs, with some independent shale producers - who’ve been hardest hit by the recent market slump - in support, while refiners and large integrated companies are typically opposed.

More uncertainty

The American Petroleum Institute, which helped arrange Friday’s meeting, argues tariffs would inject uncertainty into an already rattled global marketplace.

“If I have to do tariffs on oil coming from outside, or if I have to do something to protect thousands and tens of thousands of energy workers, and our great companies that produce all these jobs, I’ll do whatever I have to do,” Trump said Saturday. Low oil prices are “going to hurt a lot of jobs,” he said.

Measures to stem the coronavirus outbreak has forced businesses to shut and billions of people around the world to stay at home, causing demand for gasoline, diesel and jet fuel to collapse by tens of millions of barrels a day.

Job losses

Hundreds of thousands of U.S. oil industry jobs are hanging in the balance, with about $15 billion of investments wiped out from the budgets of shale explorers and many of them on the brink of bankruptcy.

On Friday, Trump had suggested he wasn’t inclined to target Russia or Saudi Arabia with oil tariffs.

“It’s a free market. We’ll figure it out,” he told reporters after Friday’s meeting with the heads of Exxon Mobil Corp., Chevron Corp. and other major producers. “Ultimately the marketplace will take care of it.”

In a statement early on Saturday, the Saudi Foreign Minister Prince Faisal bin Farhan said comments by Putin laying blame on Riyadh for the end of the OPEC+ pact between the two countries in March were “fully devoid of truth.”

Trump still expressed optimism that Russia and Saudi Arabia would reach a deal.

“I think they’re going to settle it, you know why? Because they’re going to be destroyed, they’re destroying themselves if they don’t.”