Mar 10, 2020 - Energy & Environment

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.

  • A number of analysts and industry officials are predicting that some companies will go bankrupt if there's a prolonged price trough.
  • The White House did not immediately respond to a request for comment.

Where it stands: Prices for West Texas Intermediate have fallen from well over $60-per-barrel early this year to the $34 range Tuesday, having regained some ground since Monday.

  • The decline has been sharp since Saudi Arabia and Russia failed Friday to agree to new production curbs, signaling a wave of new supplies are heading for the market.

Details: "The federal assistance is likely to take the form of low-interest government loans to the shale companies, whose lines of credit to major financial institutions have been choked off, three people said," the Post reports.

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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.

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.

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