Morning from Copenhagen.

It’s becoming increasingly clear that neither Trump nor his economic advisors are actually driving U.S. policy. Yesterday’s developments made that obvious:

1) Trump claimed the U.S.–Qatar deal was worth $1.2 trillion.

2) He also said the U.S. is not aiming to weaken the dollar as part of trade negotiations.

Given that $1.2 trillion is roughly six times Qatar’s GDP, it’s evident that Trump either had no involvement in the deal—or he’s simply making it up. Even assuming a balanced exchange, $600 billion per side still equals three times Qatar’s GDP over five years.

For Middle Eastern countries to deliver on the scale of these deals, oil needs to trade significantly higher than current levels. Trump has likely promised efforts to push oil prices up in exchange for investment in U.S. tech and infrastructure, despite oil selling off on headlines that the U.S. is nearing a nuclear deal with Iran.

Saudi oil production has been flat year-over-year for a while. To boost GDP, they need either:

1) Increased production (which may come with the announced hikes), or

2) Higher oil prices—which seems more likely for now.

Chart 1: Saudi Arabia GDP vs. Oil Output