President Donald Trump said Thursday that he expects Saudi Arabia and Russia will end an oil war and dramatically cut production.
The global gut in production, coupled with a slowing economy from the coronavirus pandemic, has sent energy prices to lows not seen since 2002. Trump tweeted that he had spoken with Saudi Crown Prince Mohammad Bin Salman days after talking to Russian President Vladimir Putin about the matter.
Trump tweeted; “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!”
Last month Saudi Arabia’s state-run oil giant Saudi Aramco said it would increase its crude oil production to 12.3 million barrels a day in April, a record. Over the past quarter, the price of crude has fallen harder than at any point in history, plunging almost 70%, to around $20 per barrel.
According to the American Petroleum Institute, U.S. crude inventories rose by 10.5 million barrels last week, well over twice what energy analysts had been expecting.
Low crude prices make many domestically-produced U.S. energy sources cost-prohibitive, and a shock to the energy sector would mean thousands of jobs lost. At the same time, for the most consumers, falling oil prices are a blessing. Some stations are selling gasoline for less than $1 a gallon, though closer to $2 is the norm.
In early March, Russia refused to join the OPEC oil cartel in proposed production cuts aimed at supporting prices. That led Saudi Arabia, the leading OPEC member, to change course by cutting prices and signaling it would ramp up production.