Oil soars 20% after Trump claims Saudi Arabia and Russia are close to ending price war
Oil surged more than 20 per cent after President by Francesca Washtell Trump claimed Saudi Arabia and Russia were close to making huge production cuts and ending a painful price war.
Crude rose to more than $30 a barrel after trading at 18-year lows for several days. During a brief spike, prices jumped by 47 per cent – the highest gain ever recorded.
However, oil is still well down on the year, having been trading at close to $70 a barrel in January.
Crude rose to $30 a barrel after trading at 18-year lows for several days. During a brief spike prices jumped by 47pc – the highest gain ever recorded
The rally yesterday came as the US president said on Twitter that Saudi Arabia and Russia planned to cut daily production by as much as 15m barrels of oil a day in a new deal.
He said he had been told this by Saudi Crown Prince Mohammed bin Salman, who had spoken to Russia’s President Putin.
Trump tweeted: ‘Could be as high as 15 million barrels. Good (GREAT) news for everyone!’
Neither Riyadh nor Moscow have confirmed they will curb the amount of oil they pump out, and a Kremlin spokesman said Putin had not spoken with the Crown Prince.
But Saudi Arabia has called for an urgent meeting of cartel Opec and other countries, known as Opec+, including Russia, to reach a ‘fair deal’ that could restore balance in the oil market.
Prices have crashed as demand for jet fuel and petrol has slumped during the coronavirus outbreak.
But more pressure was added in early March when Moscow refused to back an agreement to make further cuts to production.
Saudi then pledged to boost its oil output by several million barrels a day, flooding the already saturated market with even more cheap crude.
Chris Beauchamp, chief market analyst at online trading platform IG, said fixing the supply war was only ‘half the problem’.
He said: ‘Abundant supply has come at a time of anaemic demand, and cutting back even modestly on output still leaves the world awash with oil that it doesn’t need, want or have space for.
‘Only a sizeable rebound in demand, and soon, could help provide a more durable solution, and that is not likely to develop in the near future, with lockdowns being extended in Europe and no sign that the rate of infection in the US has yet stabilised.’ Shell and BP shares rose by 9.4 per cent and 5.9 per cent respectively on the rally