Trump Says Oil Prices May Be Too Low and He’s Calling Putin
President Donald Trump said he’s concerned oil prices have fallen too far and that he would call Vladimir Putin on Monday to discuss Russia’s oil-price war with Saudi Arabia and the global response to the coronavirus pandemic.
The U.S. president said he does not want to see the energy sector “wiped out” after Russia and Saudi Arabia “both went crazy” and launched into a conflict that depressed oil prices.
“I never thought I’d be saying that maybe we have to have an oil increase, because we do. The price is so low,” Trump said in an interview on “Fox & Friends.”
Oil briefly recovered some losses. West Texas Intermediate crude traded near the lows of the day at $20.15 a barrel as of 9:51 a.m. in New York, after bouncing as high as $20.71.
Trump’s view on the the dispute marks a shift from earlier this month, when he likened the plunge in oil prices toa “tax cut” for Americans. The U.S. president spoke to Saudi Crown Prince Mohammad bin Salman on March 9 about the dispute.
Trump has long argued that improving relations between Washington and Moscow could help solve international disputes. The president said he wanted to discuss trade with Putin, though he said he expected the Russian president to raise objections to U.S. sanctions. Trump also said they’d discuss the coronavirus outbreak.
“Russia’s got a big problem with that too, with the virus, so we’ll be talking about that, but literally that’s my next call,” Trump said.
Oil tumbled earlier to its lowest point in nearly two decades, heading for the worst quarter on record as coronavirus lockdowns cascaded through the world’s largest economies, leaving the market overwhelmed by cratering demand and a ballooning surplus. The slump in demand has shut refineries fromSouth Africa toCanada.
Goldman Sachs Group Inc. estimates consumption will drop by 26 million barrels a day this week. Meanwhile, Riyadh and Moscow are showingno signs of a detente in their supply battle as Saudi Arabia announced plans to increase its oil exports in the coming months, despiteU.S. warnings against flooding the market.
Some analysts argue Russia’s motivations extend well beyond oil and are complicated by the federation’s anger over U.S. sanctions and opposition to Nord Stream 2 pipeline linking Russia to Germany. And the price for getting Russia to back down could be too high.
“Russia’s concerns with the U.S. go beyond market share. Putin is frustrated with sanctions and may be more interested in punishing the U.S. than Saudi Arabia,” said Dan Eberhart, a Trump donor and chief executive of drilling services company Canary LLC. “If Trump wants an agreement with Putin, he may have to promise to ease up on sanctions. I am not sure he can deliver without the backing of congress.”
Rosneft PJSC over the weekendsold its assets in Venezuela to the Russian government, a move that shields the Russian oil giant from further U.S. sanctions while keeping Moscow behind the regime of Nicolas Maduro. Fears of broader sanctions have grown after the U.S. in recent months slapped restrictions on Rosneft trading companies for handling business with Venezuela.
Talks between members of theOrganization of Petroleum Exporting Countries and its allies broke down in early March as Russia refused to sign on to larger production cuts proposed by Saudi Arabia. The failure to reach an agreement prompted the Saudis to unleash a price war which, combined with the devastating effect of the virus pandemic, caused the market to crash.
Global demand is slumping by as much as 20 million barrels a day, about 20%, as billions of people go into lockdown to slow the spread of the virus. The outlook remains dire, with traders, banks and analysts forecasting a huge oversupply as governments effectively shut their economies.
Oil industry leaders, trade groups and some Republican senators have pressed the Trump administration to seek a diplomatic solution with Saudi Arabia. Six senators from oil-producing states last weekurged Secretary of State Michael Pompeo to take a tougher stance against Saudi Arabia, while highlighting several “powerful tools at our disposal,” including sanctions, tariffs and other trade restrictions.
“Trump would have better success pressing Saudi Arabia than Russia since they are dependent on the U.S. for protection, intelligence and arms sales,” Eberhart said.
— With assistance by Josh Wingrove, and Javier Blas
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