Trump and Putin at the G20 in Osaka in 2019. Photo: Mikhail Svetlov/Getty Images

President Trump said on "Fox & Friends" Monday morning that he's planned to speak with Russian President Vladimir Putin about the Russia-Saudi rupture on oil policy that's helping to push prices lower.

What he's saying: "I’m talking to him about that among other things, because you know, getting along with Russia is a good thing," Trump said in a response to a question about pain in the oil-and-gas industry.

Why it matters: The three-year-old Saudi-Russia agreement on supply management collapsed in early March, putting further pressure on prices already pushed steeply downward because the coronavirus has frozen so much travel and economic activity.

  • The vow to discuss the topic with Putin comes as U.S. officials are also pressing Saudi Arabia to back off plans to boost supplies to the already flooded market, but that initiative has yet to show results.
  • The price and demand collapse is creating severe financial pressure on U.S. producers, who have already been announcing steep cutbacks.

But, but, but: Global demand is undergoing such an unprecedented collapse that any potential changes in Russia and Saudi supply decisions are likely to have only a limited effect.

The big picture: A Goldman Sachs note this morning offers a window into the unprecedented crisis facing the oil industry.

  • Their analysts now estimate that global oil demand has fallen by 26 million barrels per day — a 25% cut in consumption.
  • Worsening physical constraints on storage mean that at least 900,000 barrels per day have been halted, or "shut in," and it's growing by the hour. One problem for the sector is that shutting in wells can significantly and permanently damage them.
  • That will affect the industry's ability to supply the market once demand normalizes. "[W]e believe the upstream sector could lose as much as 5.0 million b/d of oil supply capacity," they note.

Threat level: Bloomberg reports that pipeline operators are asking oil companies to scale back production "in the clearest sign yet that a growing glut of crude is overwhelming storage capacity."

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