Donald Trump, watching the potential demise of US shale in an election year, is making repeated requests for a respite from Riyadh.
“Just spoke to my friend MBS,” he tweeted Thursday, announcing that the Saudi crown prince had dangled a reduction of 10 million barrels – presumably per day – in coordination with Russia.
“Could be as high as 15 Million Barrels,” the US president quickly added.
Crude oil has since climbed to nearly US$25 per barrel after dropping as low as $19.52 on March 30.
15 new tankers
Saudi Arabia over the past month has been blasting the world with cheap oil in a high-stakes gamble to force rival Russia from the market.
Trump earlier this week offered to mediate between Riyadh and Moscow, after cajoling by Secretary of State Mike Pompeo failed to convince Crown Prince Mohammed to end the month-old price war.
The kingdom has thus far been unswayed by its American ally’s entreaties.
State oil titan Saudi Aramco bragged on Wednesday that it had filled 15 new tankers with 18.8 million barrels of crude.
“Reliability is not just a performance indicator, but rather a culture of sustainability in supplying the world with energy.”
“That’s energy; that’s Aramco,” the company tweeted.
While OPEC has long provoked the ire of President Trump, he may not be looking to the Saudi-led cartel to salvage his own country’s oil production.
It is now in the realm of possibility, a Gulf-based ecnomist told Asia Times, that US shale producers could join forces with OPEC and Russia to coordinate new global production cuts.
The Trump administration had already been looking to Russia in recent days for intervention, after it was unable to sway its longtime Gulf ally.
US Secretary of Energy Dan Brouillette on Tuesday called Russian Energy Minister Alexander Novak, following up on Trump’s March 30 phone call with his counterpart Vladimir Putin.
“Secretary Brouillette and Minister Novak discussed energy market developments and agreed to continue dialogue among major energy producers and consumers, including through the G20, to address this unprecedented period of disruption in the world economy,” Russia’s TASS agency reported, quoting the US Department of Energy.
US oilfield activity “will collapse” should prices remain where they are, investment firm Raymond James warned last week.
The price war was sparked on March 6, when former OPEC+ partners Saudi Arabia and Russia failed to reach an agreement on production caps.
While the Saudis wanted to see production cuts deepened to compensate for a drop in Chinese demand and to fund their budget, the Russians wanted to keep the caps as they were to compete with US shale.
The Saudis then decided to embark on a game of chicken, flooding the market with oil and offering steep discounts to buyers, in an apparent bid to force the Russians to return to the table. But the Russians also dug in, sending prices into a nosedive.
The flood of oil arrived in parallel with a global collapse in demand caused by the coronavirus pandemic.
Fears over Covid-19 transmission have grounded major airlines like Emirates, brought cruise lines to a halt and shuttered businesses around the world, as billions of people – from India to California – heed calls to “stay home.”
Trump initially took to labeling the price collapse in positive terms as a “tax break” for the American consumer.
Now that the severity of the situation has set in, Trump is set to meet with US oil executives on Friday at the White House to discuss support for the beleaguered industry.