Mar 19, 2020 - Energy & Environment

Trump eyes intervention in Saudi-Russia oil dispute

Photo: Chip Somodevilla / Getty Images

President Trump said Thursday he's eyeing intervention in the oil price war between Russia and Saudi Arabia, a dispute that combined with COVID-19's economic toll is pushing prices sharply downward and creating financial jeopardy for U.S. producers.

At the appropriate time, I will get involved, yes.
— President Trump

Why it matters: The pledge came in Trump's first extensive comments on the upended oil market, but he also suggested that he has mixed feelings about the price collapse.

  • Trump, at a White House briefing on the COVID-19 response, said low gas prices were helpful to consumers. But he also said the decline "hurts a great industry and very powerful industry."
  • "We're trying to find some kind of medium ground," the president said.

Where it stands: Prices for West Texas Intermediate, the U.S. benchmark, rose into the $25-per-barrel range Thursday, since dropping Wednesday to about $20, an 18-year low. However, it's still far below the roughly $63 range where prices were at the beginning of the year.

Catch up fast: Early this month, the production-limiting agreement between OPEC and Russia collapsed, prompting Saudi Arabia to announce lower prices and plans to increase supplies.

  • It comes as drastically curtailed travel and economic activity due to COVID-19 are sharply cutting global demand for oil.

What we don't know: Trump did not say what form the U.S. involvement could take.

But the Wall Street Journal reported Thursday that the U.S. could ask Saudi Arabia to revisit plans to hike output via communications through the State Department and National Security Council.

The story, citing an unnamed administration official, said the U.S. is weighing potential sanctions against Russia.

  • Separately, the Energy Department on Thursday announced a solicitation to buy an initial 30 million barrels of oil for the Strategic Petroleum Reserve, part of a wider plan to fill the stockpile. However, the plan requires congressional approval.

Go deeper

White House weighing aid for oil producers amid price collapse

Photo: Brendan Smialowski/AFP via Getty Images

The Trump administration is "strongly considering" federal assistance for U.S. oil producers facing distress due to the steep decline in prices, the Washington Post first reported and Axios has confirmed.

Why it matters: The twin forces of the novel coronavirus sapping demand and collapse of the OPEC-Russia production-limiting deal has created new jeopardy for companies, some of whom are already struggling financially.

New aftershocks from Saudi-Russia oil rupture

Photo: Alexey Nikolskey/Sputnik/AFP via Getty Images

Saudi Arabia plans to boost oil output and sharply cut prices, signaling the first response to Friday's collapse of OPEC's production-cutting pact with Russia and allied producers, according to multiple reports.

Why it matters: The unraveling of the OPEC+ agreement, at least for now, and declining oil demand due to the novel coronavirus' economic toll are upending global oil markets and geopolitics.

Oil prices plunge as market absorbs OPEC-Russia split

A Kuwaiti trader checks stock prices at Boursa Kuwait in Kuwait City, on March 8, 2020. Photo: Yasser Al-Zayyat/AFP via Getty Images

Oil prices nosedived to four-year lows Sunday as trading resumed after Friday's collapse of the OPEC-Russia production-limiting pact, a rupture slated to increase supplies at a time when the novel coronavirus is sapping demand.

The state of play: The immediate 31% collapse when trading resumed last night was the second-largest on record behind the 1991 Gulf war, Bloomberg reports.