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U.S President Trump Expects Russia-Saudi Oil Deal Soon; Crude Oil Jumps 5%

2 Apr 2020 12:09 pm
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Mumbai (Commodities Control) - U.S. President Donald Trump said he has invited U.S. oil executives to the White House to discuss ways to help the industry "ravaged" by slumping energy demand during the coronavirus outbreak and a price war between Saudi Arabia and Russia.

Trump also said he had talked recently with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal to end their price war within a "few days" -lowering production and bringing prices back up.

U.S. crude oil futures rose 5% on the open on Thursday, reversing Wednesday's losses, despite growing concerns about a looming economic depression due to the coronavirus pandemic.

U.S. WTI crude futures rose as much as $1.13 to a high of $21.44 at the open, and were at $21.26 as of 2209 GMT.

"I'm going to meet with the oil producers on Friday. I'm going to meet with independent oil producers also on Friday or Saturday. Maybe Sunday. We're going to have a lot of meetings on it," Trump told reporters at a media conference.

"Worldwide, the oil industry has been ravaged," he said. "Its very bad for Russia, its very bad for Saudi Arabia. I mean, its very bad for both. I think they’re going to make a deal."

Global oil prices have fallen by roughly two-thirds this year as the coronavirus has slammed global economies at the same time major producers Saudi Arabia and Russia have started to flood the market with oil.

The collapse in prices has threatened the once-booming U.S. drilling industry with bankruptcies and massive layoffs, and Washington has scrambled for ways to protect the sector.

In the coming meetings with oil executives, Trump is expected to discuss a range of options to help the industry, including the possibility of tariffs on oil imports from Saudi Arabia, according to the Wall Street Journal.

Major drillers are expected to participate in the initial meeting on Friday including Exxon Mobil Corp , Chevron Corp , Occidental Petroleum Corp , and Continental Resources.

Sources report that oil refiners and small producers would also be represented and the issue of potential waivers for royalties on existing federal offshore and onshore leases would be discussed.

American Petroleum Institute (API) has said in the past it opposes trade tariffs because it can complicate projects and business relationships in other countries.

The group on March 20, however, sent a letter to the Trump administration requesting relief from some regulatory requirements to ensure steady supplies during the coronavirus.

The administration has since announced it will temporarily ease some environmental enforcement.

Trump this week called Russia and Saudi Arabia's price war "crazy" and spoke with Russian President Vladimir Putin about the issue. Top energy officials from the two countries later spoke and agreed to continue discussions alongside other major global oil producers and consumers, according to the Kremlin.

The Trump administration said it is also planning to send a special envoy to Riyadh to push for lower output.

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 U.S. pressure on the kingdom to stop flooding the market.

(Commodities Control Bureau)

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