On Thursday Donald Trump wrote via twitter that he had spoken with Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin. Trump said that he expected they would cut oil production by as much as 10 million to 15 million barrels. “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!”, the US President tweeted.
After Donald Trump has made this statement, global oil prices reacted positively at once: Brent increased by 30% and costed $30 per barrel.
At the beginning of April and as a result of Russia’s unwillingness to share oil cuts Saudi Aramco managed to reach 12,3 million barrels of oil output per day ‒ that exceeds the volume the Kingdom declared in March. In addition, since April, oil production cuts, approved by OPEC and OPEC+ at the end of 2019, have already run out, which means that now the amount of oil world producers pump is not limited. Without stabilizing mechanism oil oversupply will continue to rise.
Analysts are not optimistic about the deal announced by the US President. 10-15 million barrels of oil output cut per day is good at start but not enough to balance. Since the beginning of the year prices have fallen 60% as oil demand has decreased over coronavirus pandemic, and the oversupply that global market has faced with today reaches around 25 million barrels per day.
On Friday Donald Trump meets with US oil and energy executives to discuss what administration should do. Virtual meeting of OPEC members and other oil producers is held on Monday, April 6; however, the agenda remain unclear.