U.S. President Donald Trump said Tuesday he was ready to help resolve the escalating Saudi Arabia-Russia oil price war, DW reported.
The threat of a global recession triggered by the coronavirus pandemic had already hammered prices when Riyadh said last month it would raise exports after the two sides failed to reach an agreement on production cuts in early March.
On Monday, Saudi Arabia said it would increase exports further to a record 10.6 million barrels per day from May, but Russia said it would refrain from further production hikes. The move from Riyadh will deepen a global supply glut as crude recorded its biggest monthly and quarterly price plunges in history.
Trump said he had spoken with his Russian counterpart Vladimir Putin and Saudi Crown Prince Mohammed Bin Salman by phone with the aim of halting the slide.
“The two countries are discussing it. And I am joining at the appropriate time, if need be,” Trump said.
Saudi Arabia had been exporting around 7.0 million barrels per day under an output reduction agreement among a 24-member producer alliance known as OPEC+, which included Russia.
Analysts say Riyadh is engaged in a deliberate long-term strategy to capture greater market share by pressuring its high-cost rivals.
“Saudi policy will not just drive more expensive forms of oil production out of the market; it will also make it harder for renewable energy to compete with fossil fuels,” said Bernard Haykel, a Saudi expert at Princeton University.
According to Goldman Sachs, any agreement to cut output would likely be too late and would fall short of the loss in consumption. Industry data signaled that U.S. oil stockpiles are set for their biggest weekly increase since 2017.
“I don’t think they’re going to come to the table for talks just yet, because, for both sides, it would require a significant step-down,” Amrita Sen, chief oil analyst at Energy Aspects told Bloomberg.
“I do think both Russia and Saudi Arabia will be forced to cut back production, not because there’s a deal or they’re talking, but because of market forces,” she added.