United States President Donald Trump said on Monday that he planned to speak with Russian President Vladimir Putin and said Saudi Arabia and Russia “both went crazy” in their oil-price war – a battle begun just as the spread of the coronavirus around the world squashed oil demand.
“I never thought I’d be saying that maybe we have to have an oil [price] increase, because we do,” Trump said in a morning interview with Fox News Channel. “The price is so low now they’re fighting like crazy over, over distribution and over how many barrels to let go.”
Trump said he would talk with Putin right after the interview and that they would also discuss Russia’s “big problem” with the coronavirus pandemic.
After Saudi Arabia-led OPEC failed to convince Russia to agree to deep output cuts earlier this month, Riyadh announced it would start pumping crude with abandon, flooding an already-saturated market that has been further roiled by a contraction in demand from coronavirus business and travel disruptions.
The Saudi announcement caused crude prices to collapse. That poses a serious threat to the US shale oil industry, which has increased its market share in recent years by taking on debt.
“We don’t want to have a dead industry that’s wiped out,” Trump said in the interview. “It’s bad for them, bad for everybody. This is a fight between Saudi Arabia and Russia having to do with how many barrels to let out. And they both went crazy, they both went crazy.”
Goldman Sachs analysts said on Monday that oil demands from commuters and airlines, which account for about 16 million barrels per day of global consumption, may never return to their previous levels.
Oil prices fell on Monday, with prices of US benchmark West Texas Intermediate crude briefly dropping below $20 a barrel and prices for international benchmark Brent crude falling to an 18-year low.
The crude price collapse has also made it almost impossible for OPEC producers such as Nigeria, Angola, Algeria and Venezuela to compete. The pain from the lost revenue is especially severe for countries struggling to confront the coronavirus pandemic.
The Trump administration is also seeking to persuade the world’s top oil exporter, Saudi Arabia, to help stabilize oil markets, and will soon send a special energy envoy, Victoria Coates, to the kingdom.
In addition to oil and the pandemic, Trump said he and Putin would talk about trade and sanctions the US has imposed on Russia.
After Washington imposed sanctions on two units of Russia’s largest oil producer, Rosneft, in Venezuela, the company said on Saturday it had sold the assets to an unnamed company owned by the Russian government.
The change of ownership means any future US sanctions on Russian-controlled oil operations in Venezuela would target the Russian government directly.
Late last year, Washington slapped sanctions on Russia’s Nord Stream 2 natural gas pipeline, halting work on the project weeks before it was expected to be finished. Russia says the pipeline will be completed eventually, but the delay could allow increased competition for natural gas markets in Europe. The US is eager to export more liquefied natural gas to Europe.