Business News

CCTV Script 05/07/18


— This is the script of CNBC's news report for China's CCTV on July 5, 2018, Thursday.

Yes, nearly 40 million people who choose to drive on American Independence Day will find that this year's oil prices have risen sharply, and the cost of their entire travel has exceeded that of last year. The consumer's feelings are often the most intuitive. The price of oil on the US Independence Day this year is the highest "Independence Day" oil price in four years. In the United States, gasoline prices per gallon are about 63 cents higher than the same period last year, and gasoline prices in many regions have exceeded $3 per gallon.

At the same time, if we calculate with a four-day trip, according to data from oil analysis company GasBuddy, the soaring price of oil may lead to an extra spend of more than $1 billion on gasoline in this year's Independence Day . And a lot of energy analysts also warned that with the arrival of peak travel in July and August, American consumers are also likely to face the oil price ranging from 2.9 US dollars to 3.10 US dollars per gallon.

Historical data tells us that the rise in oil prices will put political pressure on the White House. The Trump administration and the Republican Party are facing the mid-term congressional elections in November this year. Therefore, the recent rise in oil and gas prices has brought Washington a big challenge. Because the rise in oil and gas prices is equivalent to increasing spending for American consumers, and that will cost the tax reforms passed by the Trump administration last December, while pushing up inflation and suppressing economic growth. And this result is obviously what the Trump administration does not want to see. Therefore, we have recently seen Trump frequently posting Twitter, attacking OPEC organizations and demanding Saudi Arabia to increase production.

On Wednesday, Trump re-issued Twitter, accusing OPEC of raising oil and gas prices. He wrote that OPEC monopolists must remember that oil prices are rising and they are standing by. It can even be said that while the United States defends many of its members with almost no compensation, they are pushing oil prices up. This must be equal between the two parties. Cut prices now!

Trump’s aggressive tone confirmed the political pressure that oil prices brought to the White House to some extent. At the end of last month, Trump said on the earlier Twitter that he had already called the Saudi king to increase production by 2 million barrels. However, this practice has also been criticized by the outside world. For example, Beat Wittmann, a partner at financial consultancy Porta Advisors, said: You can't ask for an increase of 2 million barrels a day, such as a coffee. At present, the Saudi cabinet has confirmed that it is ready to use oil spare capacity when necessary, and to cope with other oil-producing countries to respond to any changes in supply and demand in the future. However, the latest news from Saudi Arabia did not say any production figures, showing Saudi Arabia’s cautious attitude towards US pressure. The market did not react much to Trump's Twitter overnight. In this morning's trading, the US West Texas Light crude oil traded above $74 per barrel, while the Brent crude oil hovered around $78. We will keep an eye on this issue.