Oil Soars After Trump Says Saudi Arabia, Russia to Cut Supply

Marco Green
April 2, 2020

Oil prices have shot up after President Donald Trump hinted that Russian Federation and Saudi Arabia may soon call a truce on their spat and work together once more to support the market.

Price of a barrel of Brent crude had sunk to US$25.32 on Wednesday - its lowest level since 2003, while West Texas Intermediate (US crude) plummeted to US$19.38 - a price point not seen since 2002, according to IG oil futures trading data. To help the oil market find a base, a truce between Russian Federation and Saudi Arabia is essential, especially as global demand crumbles under the weight of the coronavirus pandemic.

ANZ Bank however said that United States prices were being bolstered also by reports that the USA energy department may rent space in the country's emergency oil reserves to local producers.

Saudi Arabia's crude supply rose on Wednesday to a record of more than 12 million barrels per day, two industry sources said, despite a plunge in demand triggered by the coronavirus outbreak and US pressure on the kingdom to stop flooding the market.

Adding that producers were forced to end all voluntary supply restraint because of Russia's rejection to deeper oil output cuts in the OPEC+ meeting last month.

Saudi Arabia was expected to call an emergency meeting of the Organization of Petroleum Exporting Countries. US crude prices fell under $20 per barrel a few times during recent days.

But Russia's Vladimir Putin doesn't plan to speak with Saudi Arabia in the coming days, the Kremlin said. "But there is a lot of uncertainty here, and it likely takes lifting COVID-19 related stay-at-home orders for the oil market to recover", said Josh Young, Chief Investment Officer at Bison Interests, a Houston investment firm. On Wednesday, the kingdom said it was pumping at a record and had this week loaded nearly 19 million barrels of oil in a single day.

Oil futures prices have retraced slightly from the 18-year low levels recorded on Wednesday 01 April.

Meanwhile, Mr Trump will reportedly meet the bosses of major energy companies, including Exxon Mobil and Chevron, at the White House on Friday.

Other reports by Click Lancashire

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