Oil Prices Soar Following Trump Tweet on Saudi-Russia Output Cuts
Oil prices surged on Thursday as U.S. President Donald Trump tweeted that he expects Saudi Arabia and Russia to soon end their ongoing oil price war and reach a deal to cut back production by “approximately 10 Million Barrels, and maybe substantially more.” WTI futures for May delivery jumped US$4.60, or 23%, on Thursday to US$24.90 per barrel, while the Brent June contract rose by 21% to US$29.94 per barrel.
However, industry analysts cautioned that there might still be a way to go before Saudi Arabia and Russia reach any agreement on output cuts. While the Saudis remain keen on pushing through cuts, Russian President Vladimir Putin is expected to continue playing political hardball to ensure that any deal protects Russian market share and while maximizing his country’s oil revenues.
The current glut in supply has come largely at the expense of higher-cost U.S. shale producers, many of whom are likely to soon be forced to shut-in production as U.S. oil storage capacity runs low. Analyst forecasts for the drop in global crude oil demand during April currently range from 15 millions barrels a day to as high as 22 million barrels, with oversupply expected to persist through the second quarter of this year.