Aside from the coronavirus, we have the added problem of an oil war between Saudi Arabia and Russia. President Trump, after negotiating with both countries, fully expects both to make drastic cuts to their oil production to calm the markets.
Our oil markets rose on the news today.
West Texas Intermediate crude oil, the U.S. benchmark, surged by as much as 35 percent to $25.32 a barrel, while Brent crude oil, the international benchmark, jumped 47 percent to $36.29. Both energy components pared their gains but were still trading up more than 23 percent, Fox Business reported.
“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 in regard to Saudi Arabia and Russia.
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!
— Donald J. Trump (@realDonaldTrump) April 2, 2020
Oil prices were crashing as the two nations glutted the market in their war at the same time our businesses are shuttered.
Russia had refused to join OPEC and Saudi Arabia responded by boosting its output to keep its market share. Then Russia responded. It’s destroying our shale market which is built on a great deal of debt.
Goldman Sachs strategist Damien Courvalin thinks it’s too late for inland markets. We will have to see about that.
In the meantime, if things improve greatly, one thing is certain, President Trump won’t get any credit whatsoever. In fact, the opposite is likely true.
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