Oil Soars 25% as Trump Expects Saudi-Russia Cuts of 10M Barrels

  • Apr 02, 2020
  • Investing

Investing.com - President Donald Trump sent crude oil prices flying higher on Thursday, saying he "expects" Saudi Arabia and Russia to cut crude oil production by about 10 million barrels a day.

Trump tweeted that after speaking with Saudi Arabia Crown Prince Mohammed bin Salman, who he said spoke with Russian President Vladimir Putin, the two have agreed to cool off their price war and cut production, which would help the U.S. energy industry.

WTI futures, up already on hopes of a deal, soared more than 25% following the tweet.

“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 tweeted.

Twenty-three minutes later, Trump tweeted that the cuts could be as 15 million barrels. Cuts of that size would require coordination with OPEC+, which includes Russia.

Trump had himself spoken to Putin earlier this week. But the Kremlin denied that Putin had spoken to "MbS" this week, Reuters reported.

Meanwhile, the Saudi Press Agency reported that Saudi Arabia had called for an urgent meeting of the OPEC+ group of producers "in appreciation of the US president's request".

In more evidence of the through-the-looking-glass economic situation, a president facing re-election is actually pushing for higher oil prices. That’s because the price war, couple with the Covid-19 demand destruction, is pushing prices to levels that could wipe out the U.S. shale industry. Pioneer Natural Resources (NYSE:PXD) CEO Scott Sheffield warned last week that that could cost Trump a swathe of oil-producing states in the south and mid-west in November.

Trump is scheduled to meet with oil and gas executives at the White House tomorrow. At his press briefing on Wednesday, he had said his meetings with the domestic oil industry could stretch over the whole weekend.