Will Saudi And Russia Come To An Agreement

Oil prices posted their biggest weekly rise since records began on Friday, buoyed by expectations that Saudi Arabia and Russia will work together to cut global crude oil production, but analysts said any deal to avoid a market surplus would likely need U.S. help. who have yet to mention their plans to reduce their near-record production levels. Trump met with oil industry leaders on Friday and promised that the U.S. energy sector would be revived. “Hopefully, the U.S. oil industry has avoided the worst-case scenario,” said Amy Myers Jaffe, an energy and Middle East expert at the Council on Foreign Relations. “There will still be bankruptcies, but for now, fears of widespread destruction of the industry can now be put aside because the worst of the price war is over.” Recent news about the effectiveness of vaccines in warding off the coronavirus, which has pushed oil prices to their highest level since their crash in April, has likely made it harder to reach a deal. In response to these higher prices, some oil producers saw less need to maintain tight inventories and wanted to increase pumping to try to offset nearly a year of dark oil revenues. Saudi Arabia and Russia usually take the initiative to set global production targets. But President Trump, facing a re-election campaign, a collapse of the economy and U.S. oil companies grappling with collapsing prices, took the unusual step of getting involved after the two countries entered a price war a month ago.

Mr Trump had made a deal a key priority. The deal will cut production by 9.7 million barrels per day. While the reduction is substantial, it is far from what is needed to link oil production to demand. He believes oil prices will remain low even if OPEC+ cuts production because “whatever they cut, they can`t sell anyway” given the “massive” drop in oil demand. Sunday`s deal was the result of more than a week of phone conversations with Mr Trump; Saudi Crown Prince Mohammed bin Salman; and President Vladimir W. Putin of Russia. Trump praised the deal, saying on Twitter that it will “save hundreds of thousands of jobs in the U.S. energy sector.” “There will be companies that don`t survive,” said Trent Latshaw, president of Latshaw Drilling, an oil services company that operates in Texas and Oklahoma.

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