Russia and Saudi Arabia are set to hold a virtual meeting to discuss production cuts that President Trump has suggested could total 10 million barrels per day. Market data provided by Factset. Don’t push a meeting if you can’t be sure Russia, Saudi Arabia and others will make an agreement that will satisfy the market. In any case, there is talk of using the meeting to coordinate production cuts among large non-OPEC+ oil producers, but it is really unclear what the U.S. government can practically do on that front without legal and political pushback from some domestic oil companies. Russia and Saudi Arabia have overcome all hurdles to cut oil production at a meeting of OPEC, ending a month-long price war. A drilling rig in a Russian oil field. Legal Statement. There is expected to be a virtual meeting of G20 energy secretaries and ministers on Friday, which happens to be Good Friday and a holiday in much of the world. All rights reserved. They will be meeting under the auspices of OPEC+, which is comprised of the OPEC cartel countries plus Russia, Mexico, Kazakhstan and some other oil producing nations that have partnered together for oil policy over the last few years. Saudi Arabia and Russia, both major oil producing countries, were scheduled to meet on Monday, but the meeting has now been pushed back to Thursday. Coronavirus: Tech firms summoned over 'crackpot' 5G conspiracies, https://www.bbc.com/news/business-52178834, Oil prices surge on hopes of a price war truce, Oil plunges in Asia as producers start price war, Oil plunges 10% after Opec deal collapses. The U.S., unlike most of the OPEC+ countries, follows a. system, and, with a few exceptions, its oil industry is and has been decentralized. (Photo by Gary Ramage - Pool/Getty Images), Impact 50: Investors Seeking Profit — And Pushing For Change. The emergency G20 virtual summit was convened for world G20 leaders to discuss the coronavirus (COVID-19) pandemic. Saudi Arabia and Russia, both major oil producing countries, were scheduled to meet on Monday, but the meeting has now been pushed back to Thursday. However, the primary cause of the oil crash is weak demand, not excess supply. Also unanswered is whether the meeting will involve only producing nations—e.g. While more than 100 million barrels of oil are produced in the world on any day, the U.S. is the biggest single reason for an oversupply of oil on the world market. energy sector CEOs in the Cabinet Room of the White House April 3, 2020 in Washington, DC. Saudi Arabia and Russia have been locked in an epic price war since early March, flooding the oil market with cheap crude. No one wants the price of oil to fall further, and the U.S. doesn’t want to be blamed for something that is not its fault. The current rotating ceremonial leadership of the G20 belongs to Saudi Arabia, which raises questions about Saudi Arabia’s role and intentions in arranging this. The U.S. should not be expected to make cuts—if it even could—since it never joined an oil market-setting group. The current rotating ceremonial leadership of the G20 belongs to Saudi Arabia, which raises questions about Saudi Arabia’s role and intentions in arranging this. My book, Saudi, Inc., (Pegasus Books, 2018) covers the history and policy of Aramco and Saudi Arabia. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. Trump’s administration should be prepared for this. The United States is not a part of OPEC+, but it seems that Russia, Saudi Arabia and partner countries are setting the U.S. at the. Russia and Saudi Arabia have called off their brutal price war and are now pushing dozens of major crude producers toward a deal that would slash production and help stabilize a … There is no indication OPEC+ is wiser this time. It is easy for them to lay blame on continued production out of the U.S. and to say that a deal could not be done so long as the U.S. does not commit. "They're done with the situation where they cut and the US grows. Saudi Arabia is second, producing more than it ever has before at about 12 million barrels per day, and it has only been doing that for a week. My work looks at how policy, wars, diplomacy, the stock market, oil pricing, and innovation impact the future of energy. Traders are concerned that, with large parts of the world in lockdown, there will be too much crude available, putting pressure on prices. ©2020 FOX News Network, LLC. Prices are expected to remain volatile until then. You may opt-out by. President Donald Trump suggested massive production cuts could be on the way and Saudi Arabia called for an "urgent" meeting between OPEC, Russia and other unnamed nations to restore "balance" to the oil market. Morningstar: Copyright 2018 Morningstar, Inc. All Rights Reserved. And factories are not operating. Yet, Russia is setting up a situation where it could refuse, thus sending prices even lower, and subsequently blaming the U.S. In fact, it is generally illegal in the U.S. for oil companies to collude to set oil production policy or, worse yet, pricing. Read about our approach to external linking. New York (CNN Business)Hopes are building for a truce in the brutal oil price war between Saudi Arabia and Russia, setting off a record spike in the oil market Thursday. All Rights Reserved, This is a BETA experience. To enable Verizon Media and our partners to process your personal data select 'I agree', or select 'Manage settings' for more information and to manage your choices. But the United States can try to salvage the situation. "The economies of Saudi Arabia and Russia are all being affected by the oil prices." “Normally, you would get a benefit from low oil prices. The tweet said the invitation is part of Saudi Arabia's efforts to support the global economy "and in appreciation of the US President's request and the US friends' request.". Oil prices jumped … Demand for transport fuels in particular has been decimated by travel restrictions aimed at containing the pandemic. Previous cuts by OPEC and its allies have given US shale producers room to capture market share. All rights reserved. Information about your device and internet connection, including your IP address, Browsing and search activity while using Verizon Media websites and apps. EIA officials also forecast the U.S. will become a net importer of crude oil in the third quarter. Factset: FactSet Research Systems Inc.2018. Most stock quote data provided by BATS. Also unanswered is whether the meeting will involve only producing nations—e.g. Check out my website . POLAND - 2020/03/19: In this photo illustration an OPEC logo seen displayed on a smartphone with a ... [+] World map of COVID 19 epidemic on the background. The US is extremely unlikely to do this, because a mandated cut is impractical in the US, violates free market principals and would most likely be challenged in court by oil companies. If the U.S. government fears Russia will refuse a cut right now, the U.S. could proactively manage the situation and call for a postponement of the virtual G20 oil meeting, which is now scheduled for Friday. But Russia and Saudi Arabia's market share strategies will be painful to sustain too, Saleri said. Following the meeting between OPEC and its allies, energy ministers of G20 nations will meet Friday to discuss the economic damage and the sharp drop in oil prices. US-traded oil, known as West Texas Intermediate, dropped more than 10% before stabilising to sit 3.5% lower. Passenger jets have been parked. Saudi Arabia, Russia, the U.S., Mexico and Brazil—or also major importers like China, Japan and India, among others. At the urging of President Trump, Russia and Saudi Arabia will lead a, of setting new production quotas which and raising the price of oil on the open market. The official Saudi Press Agency said in a tweet Thursday that the kingdom is seeking a meeting for members of the OPEC+ alliance, which includes Russia, "and another group of countries" in an attempt to try to reach a "fair solution to restore the desired. Oil companies have been negatively impacted by both the effects of coronavirus and from foreign pressures caused by Russia and Saudi Arabia in the oil markets. The Russia–Saudi Arabia oil price war of 2020 is an economic war triggered in March 2020 by Saudi Arabia in response to Russia's refusal to reduce oil production in order to keep prices for oil at moderate level. “If prices get worse, it could cause long-term harm to the global economy.”, GOLD-MINING GIANT'S CORONAVIRUS STRATEGY HONED DURING EBOLA OUTBREAK. They will be meeting under the auspices of OPEC+, which is comprised of the OPEC cartel countries plus Russia, Mexico, Kazakhstan and some other oil producing nations that have partnered together for oil policy over the last few years.