Oil prices have rallied after a phone call between Donald Trump and Vladimir Putin raised hopes that tensions between Moscow and Saudi Arabia may start to ease, Money Control reported.
Brent crude prices rose as much as 3.5% to $23.55 overnight, after hitting an 18-year low of less than $23 per barrel on Monday. The global benchmark for oil prices lost some of its gains later on Tuesday but was still trading just above the $23 level at $23.01, a rise of 1.1%.
Oil giant Shell said on Tuesday it would take a $400 million – $800 million charge in the first quarter as a result of plunging crude prices. The company is already planning to slash $9 billion from its spending plans to weather the collapse in prices amid the coronavirus pandemic.
The black gold price had been hovering near 18-years lows after Saudi Arabia and Russia failed to reach an agreement on production cuts and the novel coronavirus pandemic darkened global demand outlook.
Both producers are preparing to pump record amounts of oil to gain a greater share of the global market, despite a plunge in demand for energy during the coronavirus crisis. It has triggered the sharpest drop in oil prices since 1991.
While Saudi Arabia denied it was in talks with Russia over a potential truce on Monday, news of the US president’s call to his Russian counterpart sparked a degree of hope among investors that global leaders may be ready to compromise in order to support the oil market.
The Kremlin said in a statement that the two leaders discussed the coronavirus pandemic and “exchanged views on the current state of the global oil market and agreed that Russian and American energy ministers should hold consultations on this topic.”