Oil price soars 30% after Trump claims Saudi and Russia will slash output

Oil price soars 30% after Trump claims Saudi and Russia will slash output
Oil prices rebounded following Trump's announcement he had spoken to Saudi and Russian leaders, claiming they had agreed to cut back production by at least 10 million barrels per day.
3 min read
02 April, 2020
Donald Trump said he had spoken to MbS and Putin about the price war [Getty]

US President Donald Trump said on Thursday that after speaking to Saudi Arabia's leader he expects a slashing of oil production, defusing a escalating Saudi-Russian oil price war that has heavily impacted the US energy industry.

Benchmark contracts Brent North Sea and West Texas Intermediate soared more than 30 percent after Trump's tweet.

"Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia," Trump tweeted, referring to Crown Prince Mohammed bin Salman and Vladimir Putin.

"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!" Trump tweeted.

"Could be as high as 15 Million Barrels," he added in a subsequent post.

It was not clear from the tweets to what extent each of the two countries was intending to cut.

Saudi Arabia calls for OPEC+ meeting

Following Trump's remarks, Saudi Arabia made a surprise call for a meeting of the OPEC+ oil producers to "stabilise the oil market" amid a price war.

"The kingdom calls for an urgent meeting of OPEC+ and a group of other countries with the aim to try and reach a fair deal to restore balance to the oil market," said a statement carried by the Saudi Press Agency.

"This call comes in the framework of the kingdom's continued support for the global economy under these exceptional circumstances and in estimation of a call by US President Donald Trump and US friends," the statement said.

Riyadh reiterated that it had tried to reach an agreement among OPEC+ members to cut production and "secured the support of 22 countries... but failed to secure consensus".

Saudi Arabia had blamed Russia for refusing to agree to an additional output cut of 1.5 million barrels per day on top of reduction already in place of 1.7 million bpd.

As a result, the kingdom opened its crude oil taps, deciding to raise its production to a record 12.3 percent from April 1.

It later said it will export at least 10 million bpd in April, which will be raised to a record high 10.6 million bpd to flood the global markets.

The oil price war sent prices crashing to 18-year lows, putting a tremendous pressure on US shale oil, which is expensive to produce.

Kremlin denies Putin spoke to MbS

The Kremlin on Thursday denied President Vladimir Putin spoke to Saudi Crown Prince Mohammed bin Salman after US President Donald Trump made the claim on Twitter.

"No, there was no conversation," Putin's spokesman Dmitry Peskov told Interfax news agency, adding that "so far" there were no plans for such talks, after Trump said the Saudi crown prince had spoken to Putin and he expected them to agree on a cut in oil production.

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