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

Published 04/02/2020, 10:41 AM
Updated 04/02/2020, 11:00 AM
© Reuters.

By Kim Khan

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.

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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.

Latest comments

OPEC+ wants US shale lose their No1 position in oil industry. That's the main reason of this price war. But shale companies surviving now for future, after corona virus disappeared. Cause Both sides can not make a deal in Monday. without shale companies sacrifice, OPEC+ never agree to cut oil production, and US shale companies will not want to loose their NO1 position and make it ruin their sacrifice for 1 month. It means They are losing chance in future recovering profit and be a NO1 position in oil industry.
Monday's OPEC+ may failed, cause Friday Trump has to make deal with domestic oil com to cut production, but I think he cannot make it. Only Texas can be order to cut by law, but with that amount of oil production cut can't hit the OPEC+' need. Plus without withdrawing sanction over North Streaming, Russia never cut the oil production. But Trump did it, he will hardly re-elected president again. So, only small of, for example 3M cut or so is possible in OPEC+, but shrinking oil need is around 20M bpd. So oil price will sharply dropped again to 20 dollar around. All of certain thing is only OPEC+ has meeting in Monday. Don't know who will intend, so many counties, so many desires, It's a business. Global cooperation? Beautiful words, but business is business. They can never make any out put in Monday. Sorry, but frankly this is not for global need, but US need. All of countries try to get best from this time.
how can based on fictitious Twitter conversations draw a conclusions???I couldn't believe...
This is not the deal.. be carefull everybody
maybe you right...
I don't understand, why everyone believed the Trump !?
Oh, thank you Trump, actually I bet to oil in long.
Today's paper from Saudi Kingdom, they requested urgent meeting OPEC, but don't know where, when, what agenda. I think allies of US tried his best for asking from Trump, but without Russia, without US oil prodution cut, Only Saudi can't make it deal. Trump also know this, then what is the purpose of him? I guess he want to show doing something to people, and give the image to Russia, Saudi as a resources of economic crisis. It's good for his political interests.
If talk successful among them, then what impact will occur in currency pairs. please any one who has idea about.....
Cad/usd, aud/usd will rise
his tweet before that was "hold my beer"
Coming domestic oil companies meeting, many of them against to price down, cause it is violate of law, also like exxon mobil is preparing M and A for small shale. 10M barrel cut? No way sir, the previous 2M cut was failed, it's unacceptable quantities. Experts predict oil demand will shrink to 16~22M per day. finally at minimum 3 months needed for oil quantity agreement in Oil Petroleum Exporting Countries usually.
Thanks Trump, we have great chance to short in oil.
good
yay..cuts in production will equal higher prices at the pump!!! smh.
Russian budget based on oil as 20 dollar per barrel, this means they has no suffering, no needed to change any strategies in oil price war. Trump know it very sure, but he lied to people. Today may it works, Tomorrow market will suffering cause his lie.
You should understand that global production will be fall because there is no place to put it. I have an offer out to rent my bath tub. No takers so far but I expect that to change.
Trump manipulated market by his twitter. He lied to people, cheated to investors.
Why can't the media confirm there were talkes? Why was one media outlet called (CNBC) by the president and told this and oil spikes. Talk about market manipulation.
Take news, donkey just lies to MBS that Putin will cut and the crown take it and call for meeting, donkey just want his oil industry to stay alive, he simply don't care anything else.
Russia and Saudi were going to have to cut production anyway because there is no storage.
Anyone who believes his tweets are fools. Nothing happens over night. OPEC still needs to agree. They will all agree he is a fool.
The only way that  Russia / OPEC+ will "cut" is if the U.S. also cuts production.  And the U.S. will cut this time around or oil will head lower yet.   Trump should have a message about a U.S. cut by next week .
Kremlin denied that Putin had spoken to "MbS" this week, Reuters reported. Trump is lier.
Rusia havet talkt to Annyone ?
Tomorrow, maybe this afternoon Kremlin and Saudi can release address that refuse Trump's hope and expect.
6 millions job loss is real, but HOPE of stopping oil price war is only sand castle of Trump. He is manipulator.
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