Trump tweet buoys market, but oil accord up in the air

Trump tweet buoys market, but oil accord up in the air

Saudi Arabian officials said Thursday they are calling an emergency meeting of the world’s top oil producers, the first sign that a truce in the oil price war with Russia that has rocked global markets and devastated the U.S. energy sector may be in the works.

In a move that sent world oil prices surging more than 20%, President Trump claimed earlier in the day that he had helped broker the move with a call to Saudi Crown Prince Mohammed bin Salman on Monday. Mr. Trump speculated that the cut in production could be as high as 15 million barrels a day.

“Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!” Mr. Trump tweeted.

But there were immediate signs that the “deal” may not be nailed down, and no confirmation from Riyadh or Moscow about the scope of any cuts.

A spokesman for President Vladimir Putin flatly denied Mr. Trump’s claim that the Russian leader had spoken to Saudi leaders about a deal, and there was no confirmation from the Kremlin that Russia would even attend the proposed meeting.

Mr. Putin did call on global oil leaders in a speech Wednesday to address the “challenging” oil market uncertainty amid the ongoing health pandemic.

“That’s why we, together with the main producers and consumers, should work out such decisions, which would mitigate the situation on the market on the whole,” Mr. Putin said.

In a statement, the Kingdom of Saudi Arabia showed a similar eagerness to stabilize the market, but said that while it has attempted to coordinate cuts with fellow OPEC members as well as Russia, “it was not possible to reach an agreement due to lack of consensus.”

Riyadh then called for an “urgent meeting” of major OPEC and non-OPEC producers, “with the aim of reaching a fair agreement to restore the desired balance of oil markets.”

Since the coronavirus outbreak, oil demand has plummeted by roughly 20 million barrels per day — almost a third of its standard traffic. Oil prices, meanwhile, have fallen over 60% since the beginning of the year as both Saudi Arabia and Russia has opened wide their pipelines.

Mr. Trump said he would meet with American oil and gas executives to discuss the potential deal on Friday, but many market watchers were openly skeptical that Moscow and Riyadh were nearing an agreement.

“President Trump was not very clear,” Anders Aslund, an economist and senior fellow at the Atlantic Council, said in an interview. “He expressed hope rather than clear conviction. He does not say when it would happen.”

He said it was “completely unlikely” that Russia and Saudi Arabia would agree to halve their production, and said that the low oil prices make an agreement within OPEC “meaningless.”

Prices “will be very low or as long as the coronavirus continues. People are not traveling now and oil is very much used for transportation,” he continued.

“This is a full war between Saudi Arabia and Russia, I see no reason why Saudi Arabia should give up on it now.”

Despite some the questions, oil-patch lawmakers on Capitol Hill hailed Mr. Trump’s talk of a potential agreement.

Sen. James Inhofe, Oklahoma Republican, said in a statement that Mr. Trump “is right to demand Saudi Arabia and Russia reduce their output and provide relief.”

Plunging oil prices, he said, are not “just a result of low demand, they are an effort to hurt our domestic oil and gas producers.”

⦁ This story is based in part on wire reports.

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