OIL prices are up! North Sea Brent is trading comfortably above $70 a barrel, its best performance for three years. Options traders – speculators, to you and me – are betting on Brent hitting $80. That would take us into a whole new economic and tax ball game. Surprisingly, this news has not gone down well in the Trump White House. A few days ago, The Donald informed the world (via Twitter): “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!”

Let’s unpick Trump’s erroneous assertions. For starters, it is simply not true there are record amounts of oil “all over the place”. That was the case a few years back when global inventories were at historic highs. But those days have gone thanks to that great ally of the US and UK – Saudi Arabia and its allies in the OPEC oil cartel. The authoritative International Energy Agency (IEA) forecasts that total global demand for oil in 2018 will average 1.5 million barrels per day. But global supply is running at around 97.8mb/d. That imbalance is the cause of the price rise.

So why the sudden shortfall in oil production versus demand? Answer: OPEC has been pursuing a policy of restricting output in order to cause a shortage, and so boost prices. After all, that’s what a cartel is for. In early 2017, the 14-member organisation agreed to cut production. Normally, that’s easier said than done as there is always an incentive for OPEC members to cheat and pump more crude that they admit, in order to make more cash. But with US frackers pumping out cheap hydrocarbons like there was no tomorrow, the Saudis eventually persuaded their cartel partners – including arch-enemy Iran – to cooperate.

You might ask why the West’s ostensible ally gets free rein to hike up the price of its energy exports? After all, the new Saudi poster boy, Crown Prince Mohammad Bin Salam, is using the cash bonanza to fight his genocidal proxy war against Iran, in Yemen. On the other hand, that war explains a lot. The Crown Prince is buying weapons galore from his Western friends to bomb Yemen even further into the Palaeolithic.

Since 2015, the UK has sold the Saudis arms worth a whopping £4.6 billion. That’s a lot of bombs. Meanwhile Trump himself has reversed President Obama’s moratorium on supplying “smart” weapons to Saudi Arabia. Bin Salman has just ordered a staggering $12.5bn of US military hardware – that’s circa $450 per Yemeni citizen. The Middle East now accounts for a third of all global arms sales. Which may explain why the West needs to keep the region ablaze – and why Middle Eastern nations need to charge more for their oil.

So why is Trump complaining? Possibly because he is worried about where the Crown Prince is headed. Basically, Saudi Arabia is an economic basket case. It has no economy to speak of except oil – and most of that is in the eastern part of the country where there is a pro-Iranian Shia population. There is massive youth unemployment and no jobs unless you are part of the (admittedly extensive) royal family. Prince Mohammad wants to modernise and industrialise but to do that he needs cash. His plan is to sell a share of Aramco, the state-owned oil company. To persuade investors to overlook the fact Aramco sits in the middle of a gigantic war zone, the prince needs to boost oil prices to circa $100 per barrel.

The problem is that if oil prices go back to those levels, it will have a negative impact on the global economy. For starters, to head off the resulting inflation, central banks would have to hike interest rates. The double whammy of dearer energy and higher interest rates could tip the world into recession. Worse for America, the dollar rises when oil gets more expensive (because crude is priced in the US currency). Oil at $100 will make US exports dearer. None of this is good news for The Donald as a champion of American economic nationalism.

All of this just goes to show how insane the neo-liberal economic order has become. And it could get worse. Trump is working up to overthrowing the left-wing Maduro regime in Venezuela, the better to privatise that nation’s decaying oil industry and ramp up production under US control. That would help spike Saudi plans to limit global oil production. In March, Trump banned Americans and US banks from using Venezuela’s new cryptocurrency, the petro, in a naked bid to further destabilise the already crisis-ridden Venezuelan economy. I have serious criticisms of the Maduro regime but Yankee intervention must be opposed.

Trump is also gunning for Iran. Indeed, the ratcheting-up of US sanctions against Iran is another cause of the recent rise in oil prices. Trump has also launched new sanctions against Russian oil oligarchs. Yet in both these cases, American meddling is adding to upward pressure on energy prices. It is conceivable that Trump is playing a devious, long-term game and that his Twitter attack on OPEC is purposely misleading. First,

domestic US oil production is surging on the back of higher prices. Second, increased oil prices will hurt China, which is now the world’s biggest importer of petroleum. Perhaps The Donald is calculating that dearer oil will keep China in check as a competitor while American energy companies supply the US domestic market (and make super profits) by despoiling Alaska. Or it might just be that Trump makes it up as he goes along, which could be nearer the truth – and even scarier.

Meanwhile, higher oil prices mean more tax income for the UK Treasury. In 2016, UK oil tax revenues were nearly zero, though that had as much to do with daft tax loopholes than the low price of Brent. But in 2017, Chancellor Hammond trousered at least £1bn as a result of the oil rise. This year he will get even more, especially if North Sea production is ramped up on the back of increased prices. The current forecast is that output will rise by at least nine per cent in 2018. Doubtless the Chancellor will use this windfall to trumpet extra cash for the NHS, come his autumn budget. But don’t expect him to mention GERS.

The truth is that nobody can ever predict where oil prices will go. But demand is well up and the global political situation is dire. That points to oil returning to something like $70 a barrel and maybe more. On current North Sea output, that would generate at least $30bn of taxable output from oil alone. What should an independent Scotland do with the cash?

The answer is the same as it has been since 1969, when the secretive oil companies finally admitted the sticky stuff was there by the barrelful: put the tax revenues into a sovereign wealth fund rather than squander it. For if Donald Trump gets his way, oil will be just as significant a political card as it has been for the past century.