West Texas Intermediate (WTI) crude oil traded near $51 a barrel Friday morning as traders tote up the likelihood that Saudi Arabia and its partners will reduce production quotas at the December 6 OPEC meeting. Although the language of any decision made at that meeting will be couched in terms of supply and demand, the reality is that Saudi Arabia is, for now, firmly in the clutches of U.S. President Donald Trump.

Trump recognizes the leverage the Saudis handed him when they murdered Washington Post journalist Jamal Khashoggi in early October, most likely in the Saudi Embassy in Istanbul. Trump has downplayed a report from the U.S. Central Intelligence Agency laying Khashoggi’s death directly on the Saudi government and Crown Prince Mohammed bin Salman.

The price the Saudis must pay for soft-pedaling the murder is lower crude oil prices and that means no cuts to production. The Trump administration is also using Khashoggi’s death to push for a ceasefire in the bloody civil war in Yemen where local opponents are fighting a proxy war between Iran and Iraq.

The result has been that crude markets, which had virtually come into balance in September, are now being threatened once again by too much supply and not enough demand. This situation is bad for producers and good for consumers, many of whom will be voting in a presidential election in 2020.

A lot can happen in two years and we might expect the pendulum to swing back to higher prices before the 2020 elections. But while most U.S. consumers haven’t been paying much attention to crude oil pipelines not named Keystone XL or Dakota Access, pipeline companies are about to bring huge new supplies of Permian Basin oil to the Texas Gulf Coast Cities of Houston and Corpus Christi.

The Saudis are probably more worried about the impact of those pipelines than they are about the international opprobrium they are getting over the murder of Khashoggi. By this time next year, around 2 million barrels a day of additional Permian crude will be transported cheaply through pipelines rather than expensively by rail or truck. A like amount of new pipeline capacity is due to come online in 2020.

Much of that crude will be exported and that’s what has the Saudis worried. Even without the pressure from Trump, a cut in production would have little impact in more than the very near term because U.S. production is forecast to rise to a world-leading total of around 12 million barrels a day next year. With pressure from Trump, the Saudis are less like to press ahead with plans to chop production by 1.4 million barrels a day to keep prices high for the next 6 to 12 months.

Politically Khashoggi’s murder presented the U.S. president with an opportunity to jawbone oil prices down and that’s the way Trump played it. Whether that’s a trade-off that should have been made is a different issue.

WTI crude oil for January delivery traded down by about $4.00 (down 7.4%) a barrel Friday morning at $50.60 after closing at $54.63 on Wednesday. Brent crude for February delivery traded at $58.97 in London, down more than 6% for the day.

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