Trump’s magic number in Venezuela is oil at $50 per barrel

President Donald Trump quickly stumbled upon a magic number in Venezuela: $50 per barrel of oil. He could get it.

The president has reportedly set a key target of $50 a barrel in what is becoming an open-ended intervention in Venezuela, with no end date. The United States has already taken control of Venezuelan oil sales and arranged for a month’s delivery of its oil supplies, while promising that American oil companies would step in to help rebuild the country’s impoverished economy.

Trump’s preferred number will upset oil executives who are hoping for higher prices but are unlikely to get them anytime soon. The U.S. oil and gas sector is shedding jobs even as the United States hits record levels of daily oil production, according to the Institute for Energy Economics and Financial Analysis. The trio of US oil giants ExxonMobil, Chevron and ConocoPhillips all announced steep workforce reductions last year.

Trump’s efforts to reduce oil prices run counter to the desire of U.S. oil companies, which are struggling to keep profits and dividends high in the face of falling oil prices.

“Trump has an old talk on energy that if we have $50 a barrel of oil, we will have much lower gasoline prices,” Carolyn Kissane, an energy professor at New York University, told Quartz. “But there’s a corollary to what this means for American energy companies: They’re not going to pump if they’re losing money.”

Analysts predict oil prices will fall to $50 a barrel this summer. Following the US raid that toppled Nicolas Maduro from power in Venezuela, the oil trade has not been turbulent. Venezuelan oil represents 1% of the global oil market, so its lower production protects against large price deviations in either direction. On Friday, oil was trading at $59 per barrel, an increase of 3% from the start of the week. Most of this increase is explained by growing fears of supply disruptions following the outbreak of anti-government protests in Iran.

At the start of the year, oil executives were already worried about the effect of falling oil prices on their businesses. “Lower oil prices are making many of our society’s wells unprofitable,” an oil executive said anonymously in a quarterly survey released in late December by the Federal Reserve Bank of Dallas. Another survey participant responded that oil markets “could approach a balanced position” only if oil supplies to Iran and Venezuela remain depressed.

American refineries are concentrated on the Gulf Coast. The breakeven price for crude oil drillers was between $62 and $64 per barrel, according to the Energy Information Administration. Lower oil prices, however, could prompt production cuts among Middle Eastern oil-producing countries and among U.S. producers as well.

“He is out of touch with the CEOs of ExxonMobils and Chevrons,” Kissane argued of the president. “I’m sure they’re going crazy over some of the remarks he’s making internally because it’s not good for their business model. They also don’t want to feel like they have to go to a country that’s still incredibly unstable.”

Along with several cabinet officials, Trump met Friday with the heads of the West’s largest multinational corporations. On the US side, the list included Chevron, ExxonMobil, ConocoPhillips, Continental Resources, Halliburton and Marathon Petroleum. He announced Thursday evening that oil companies had committed to spending “at least” $100 billion in Venezuela.