Published 21:57 IST, April 2nd 2020
Saudi Arabia, Russia to cut crude production says Trump; oil prices bloom
Sun shined over oil prices after US President Donald Trump said top oil exporters Saudi Arabia and Russia have agreed to slash crude production substantially
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The sun shined over oil prices on Thursday after US President Donald Trump said top oil exporters Saudi Arabia and Russia have agreed to slash crude production substantially, which was followed by the Saudis calling for an urgent OPEC+ meeting. International benchmark Brent Crude shot up nearly 22% within half an hour of Trump’s revelation, which was made over Twitter.
Brent crude soared to over $32 a barrel following Trump's tweet, before easing to $29. American benchmark West Texas Intermediate (WTI) shot up to $27 (+25%) a barrel before falling back to $24.
Trump's relieving tweet
President Donald Trump in a tweet said that he spoke to Saudi Arabia's Crown Prince Mohammad bin Salman, who earlier spoke to Russian President Vladimir Putin, and he expects that the two petroleum powerhouses will cut back crude production by "approximately 10 million barrels". He touted this as a "great" thing for the US oil and gas industry. The US has emerged as the world's top oil producer and has turned into a net exporter.
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!
— Donald J. Trump (@realDonaldTrump) April 2, 2020
Oil under stress
International crude oil prices have been suffering due to a demand plunge caused by the coronavirus pandemic which has put nearly a third of mankind under lockdown and shattered economic activities. Also contributing to the fall is a supply glut in the oil market after OPEC's de facto leader Saudi Arabia waged a price war with non-OPEC Russia following the collapse of a production cut deal earlier in March.
The market is flooded with oil right now, with little signs of demand picking up. Oil importers like India have been benefitting with this slump as the nation saves billions of dollars in import bill monthly.
Saudi ready for OPEC+ meet
Following Donald Trump's tweet, Saudi Arabia confirmed that the country will call an urgent meeting of the OPEC+ (OPEC plus other producers like Russia) "with an aim to retrieve balance to oil markets". OPEC is a club of 14 oil-producers that includes countries like Iran, Iraq, Venezuela, among others.
Out of the Kingdom’s commitment to support global economy, and in response to the request of the U.S. President and our friends in the #USA, the Kingdom called for an urgent #OPEC+ meeting with the participation of other countries with an aim to retrieve balance to oil markets
— Foreign Ministry 🇸🇦 (@KSAmofaEN) April 2, 2020
21:53 IST, April 2nd 2020