Trump says Russia, Saudis reach agreement to boost oil price

Washington, Apr 2 (efe-epa).- US President Donald Trump said Thursday that Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman agreed with each other to cut oil production to support the global price of crude, which has plunged amid the economic slump accompanying the Covid-19 pandemic.

“Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!,” Trump said on Twitter.

“Could be as high as 15 Million Barrels. Good (GREAT) news for everyone!,” the president added.

Trump’s tweets spurred a 35 percent rise in the price of oil futures and drove the price of Brent, Europe’s benchmark crude, up by 47 percent to $36.29 a barrel.

The collapse in oil prices has been particularly hard on the highly leveraged shale oil industry in the United States, whose production costs are much higher than those of competitors in Russia and the Middle East.

During Wednesday’s daily White House briefing on the coronavirus, a reporter asked the president about the impact of low prices on the US oil and gas sector.

“Well, look, we have a great oil industry, and the oil industry is being ravaged. And, as you know, Russia – and I spoke to President Putin, we had a great call. Russia, Saudi Arabia – I spoke with the crown prince, we had a great call. But I think that they will work it out over the next few days,” Trump said.

“If you ask me, I think it’s just – it’s too simple not to be able to. They both know what they have to do. So I think – I have confidence in both that they’ll be able to work it out,” he said.

Oil prices have tumbled to levels not seen since 2002 thanks both to the economic damage done by the coronavirus and the breakdown last month of a long-standing pact between Riyadh and Moscow to limit output.

A March 6 meeting in Vienna among officials from Russia and from Saudi Arabia and the other 22 members of the Organization of Oil Exporting Countries (OPEC) ended without agreement on new production cuts.

But Russia’s unwillingness to go along is not the only problem, as a number of the 23 OPEC member-states refused to accept a Saudi proposal to continue to obey the production quotas that expired on March 31. EFE bpm/dr