The Trump administration's effort to punish Iran by swiftly curtailing that nation's energy exports is undermining its goal of preventing oil prices from rising ahead of midterm elections.
That policy now threatens to leave the world with a shortage of crude and rob Americans of the gasoline price relief they usually get in the autumn. It may even leave drivers paying more at filling stations in the fall, just as they're preparing to cast their votes in elections that could hand Democrats control of the House.
Americans are already seeing their gas bills rise after enjoying years of low costs thanks to an historic downturn in oil prices. U.S. gasoline futures are up about 17.5 percent this year, and have risen nearly 38 percent since President Donald Trump took office.
Trump appeared to get his way just over a week ago when two dozen oil producers agreed to pump more crude to tame rising oil prices. Worried that Trump's sanctions on Iranian oil exports would cause Americans pain at the gas pump, his administration reportedly lobbied Saudi Arabia for the hike.
But just days after OPEC announced its decision, the State Department sent oil prices soaring by announcing a policy that threatens to wipe out much of Iran's crude exports in the coming months. By Saturday, Trump was tweeting that he'd asked Saudi Arabia's king to raise output by up to 2 million barrels per day (bpd) — double what the Saudis and their allies agreed to the previous week.
@RealDonaldTrump: Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference...Prices to high! He has agreed
The White House later walked back Trump's claim on Twitter that King Salman bin Abdulaziz Al Saud agreed to his request, and analysts are uncertain the Saudis can deliver. Making matters more difficult, the Trump administration has imposed a deadline on oil buyers to cut off purchases from Iran by Nov. 4, just two days before most Americans vote.
To be sure, it remains unclear to what extent higher gasoline prices would hurt Republicans at the polls, or whether voters will connect Trump's policies to gas costs. However, the threat of elevated fuel prices comes as U.S. trade disputes with its biggest trading partners risk putting upward pressure on consumer prices and denting Americans' view of the economy.