Possible Settlement of Saudi-Russia Oil War Supports Oil Prices

By Adedapo Adesanya

Global oil prices returned to positive territory on Thursday, following weeks of frequent decline in prices.

The rise experienced yesterday was spurred by renewed hopes that Saudi Arabia and Russia can put their differences aside and help the oil market.

The price of major crude surged on Thursday after the US president, Mr Donald Trump, announced what would be a possible new deal between the Saudi Kingdom and Russia, that includes cutting back on production to help stabilise the oil market.

The international benchmark, Brent crude, last night went up by 19.7 percent or $4.87 to $29.61 per barrel, while the US West Texas Intermediate (WTI) pointed north by 21.9 percent or $4.45 to $24.75 per barrel.

Mr Trump suggested that massive production cuts between 10 to 15 million barrels could happen.

In a tweet, he wrote “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!”

He backed this with a suggestion that would mean reduction to an expected fill up of world storage, saying, “Could be as high as 15 Million Barrels. Good (GREAT) news for everyone!”

In related event, Saudi Arabia called for an urgent meeting between members of the Organisation of the Petroleum Exporting Countries (OPEC), Russia and other unnamed nations to restore balance to the oil market, according to its official press agency after the US President sent the tweets.

The de-facto leader of the oil cartel has until now made clear it’s ready to cut production provided that other big oil producers, including some that aren’t part of the OPEC+ group like the US, Canada and Brazil, also reduce their output.

This could also extend to Mexico, whose energy minister said in a tweet that it’s in communication with oil-producing countries and said it was good news that the United States and Saudi Arabia appear to be on the same track.

However, late on Thursday, there were reports of a spokesman for the Russian president, Mr Vladimir Putin, who reportedly told journalists that “no one has started talking about any specific or even abstract deals”.

Saudi Arabia and Russia since last month have been in a price war that has seen them open their taps and flood the oil market with cheap crude just as demand is been affected largely because of the coronavirus pandemic.