Trump’s Oil Price Strategy Faces Two Major Tests This Weekend

Two Trump decisions will set this weekend’s energy risk, and in both he is giving up leverage to chase lower pump prices before November 3. The first is to keep U.S. firepower out of Saudi Arabia’s war with the Houthis. The Houthis hit Aramco’s Dhahran headquarters on Tuesday night and have kept Riyadh’s main airport shut until Saturday, and Washington’s rule since September is that it stays out as long as the Houthis hit only Saudi targets. The second is the license for Russian diesel. It faces its first test on October 18, the deadline in the Russia sanctions law Trump signed a month ago for duties of up to 500% on Russian petroleum products.

The Houthis hold a veto over Gulf peace

The Houthis can’t defeat Saudi Arabia, and Iran can’t defeat the United States, but both now hold a veto over any peace in the Gulf: a single missile at King Khalid or a single tanker strike in Hormuz can undo whatever Washington negotiates, and no ceasefire on the table does anything to remove the threat. 

The Houthis made the point twice in four days. Last Saturday, a missile hit King Khalid’s terminals in Riyadh and killed 13 people, an American among them. On Tuesday, they hit Aramco’s Dhahran headquarters, which houses the operations center for the company’s rigs, pipelines, refineries, and export terminals, and the fire spread across several floors. The airport stays shut until Saturday, and nearly half of all Saudi flights have been cancelled. The Houthis have told oil…

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