Oil prices spiked on Thursday morning after U.S. President Donald Trump said that he spoke with the Saudi Crown Prince, and hoped and expected that Saudi Arabia and Russia would “cut back approximately 10 Million Barrels, and maybe substantially more,” sending oil prices soaring by 20%.
“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!” President Trump tweeted on Thursday.
For anyone wondering why oil prices just spiked by over 25%... https://t.co/xjkfxOAaoS
— OilPrice.com (@OilandEnergy) April 2, 2020
Oil prices soared immediately after the tweet, with WTI Crude soaring 25.90% at $25.51 as of 11:04 a.m. EDT and Brent Crude surging 20.57% at $29.83.
According to the Saudi’s official news agency, SPA, Saudi Arabia is calling for an urgent meeting for OPEC+ states “and another group of countries”.
Making no mention of specific numbers.
The press agency later went on to make mention of the relationship with the United States.
Earlier today, prices were already gaining more than 8% after the market began to tentatively hope that former allies Russia and Saudi Arabia could re-launch talks on propping up oil prices, which are too low for both of those economies, regardless of their claims of ‘resilience’ even at these prices. Related: $1 Oil: Saudi Arabia's Attempt To Crush U.S. Shale
After weeks of ‘no-backing-down’ in the oil price war, the former allies Saudi Arabia and Russia have started hinting at readiness to re-launch cooperation to save oil prices from sliding further amid the massive demand loss in the coronavirus pandemic.
“Saudi Arabia has always welcomed and supported cooperation among oil producers in their efforts to stabilize the oil market during the current crisis, based on the principles of fairness and equity,” a Gulf source familiar with Saudi Arabia’s thinking told Reuters on Thursday, but said that the OPEC+ break-up was Russia’s fault.
Russia, for its part, has decided it’s economically unfeasible for its producers to boost oil production right now, so Moscow called off an earlier promise to also increase supply, albeit at a much lower rate than Saudi Arabia.
With U.S. shale producers suffering the first immediate blow from the Saudi-Russian oil price war, U.S. President Trump discussed the situation on the oil market with Russia’s President Vladimir Putin earlier this week, and said he held a separate phone call with Saudi Arabia’s Crown Prince Mohammed bin Salman.
By Tsvetana Paraskova for Oilprice.com
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