Oil prices shot up on Thursday morning after the US intervened in an attempt to ease the price war between Saudi Arabia and Russia.
WTI was up 10% to $22.41 a barrel and Brent was up 9.70% to $27.14 a barrel around 08:25 AM GMT. The surge comes after oil prices reached an 18-year low on Monday.
US President Donald Trump said he had discussed the drop in oil prices at length with Russian President Vladimir Putin and with Saudi crown prince Mohammed bin Salman, in two recent telephone conversations. “The two countries are talking about it between them and I can join the discussions if necessary at the appropriate time,” Trump said.
“Investors are optimistic about Donald Trump’s comments. He thinks he can bring Russia and Saudi Arabia to the negotiating table,” said Avatrade chief market analyst Naeem Aslam. Trump wants “to protect the American shale industry and is determined not to let the OPEC+ cartel destroy it,” he added.
Trump will be meeting with leaders from American oil groups hit hard by the new coronavirus (Covid-19) crisis on Friday, as he announced on Wednesday. The meeting “will probably serve to discuss a coordinated production cut,” speculated Stephen Innes, Asia-Pacific market strategist at AxiCorp, an online business for Foreign Exchange trading.
In the meantime, the price war continues. Saudi Arabia has been dropping its oil prices and ramping up production in the lead-up to the end of an agreement between OPEC (the Organisation of Petroleum Exporting Countries, which includes Saudi Arabia) and other producers including Russia. Aramco, a Saudi oil company, bought 18,8 million barrels of oil on Wednesday, a day after this agreement was terminated. “While the world needs economic stability, Aramco remains committed to providing the world with energy,” the oil giant said.