OPEC's alliance with Russia has given international oil players renewed power to raise prices and they're not ready to give that up, said Dan Yergin, leading oil analyst and Pulitzer Prize-winning author.
But even as President Donald Trump on Friday blasted the cartel for keeping oil prices "artificially" high, there are few options for the White House to fight back, Yergin said.
"I think the obituaries for OPEC were too soon once they got together with non-OPEC. And it's really the Saudi-Russian relationship," Yergin told "Squawk Box" on Friday. "They are going to continue to squeeze" oil prices higher.
Saudi-led OPEC and non-OPEC members, including Russia, were meeting Friday in Jiddah, Saudi Arabia, to talk about their January 2017 oil supply-cutting deal, which was already extended through the end of this year. Global producers are set to review the pact at a June meeting.
Saudi Arabia's oil minister told CNBC on Friday that a dramatic upswing in crude prices was little reason to become complacent. However, Russia's oil minister was a bit more cagey, telling CNBC that Moscow's commitment to the pact depends on market forces.
Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!
Yergin, vice chairman of consultancy group IHS Markit, said he's not surprised that Trump jumped on the higher oil prices, which usually means higher gas prices at the pump. "You get the political response with the president looking at gasoline prices and reading how motorists will respond to it."
However, Trump's policy actions are limited, said Yergin, who had been on Trump's now-disbanded Strategic and Policy Forum. "There's not much except for talking about it."
At the same time, the president's threats to next month pull out of the multinational Iran nuclear deal, negotiated by his predecessor Barack Obama, if changes are not made would only serve to send oil prices higher, Yergin said. "If the [Iran] sanctions go back in place that takes some of the Iranian oil off the market. And I think that's being anticipated."
The jockeying for control of the global oil market was turned on its head about a decade ago as U.S. production from the boom in extracting oil from shale sedimentary rock started taking hold, casting doubt on whether OPEC would be able to rule the roost as it had done for decades.
In fact, WTI hit all-time, non-inflation-adjusted price highs of around $145 per barrel in 2008 before cratering more than 80 percent to 2016 lows of around $26 per barrel. On Thursday, WTI reached a three-year high of $69.56 per barrel, before sliding into the settle and continuing lower Friday after Trump's tweet.
"For a couple of years, shale was this really disruptive technology," Yergin pointed out. But he said, "I think it's now assimilated into the market. The market needs that additional production."
American production is going to continue to be strong, Yergin predicted. But he suggested that U.S. crude won't have the same clout on the world stage as it's had in recent years.