Crude oil prices showed much improvement on Friday after the US President Donald Trump hinted that Saudi Arabia and Russia may soon end their oil feud.
As of 02.20 pm on Friday, W&T Offshore, Inc. was trading at $1.68, up by 0.20 points and Brent Oil was at $9.6 up by 1.44 points
The president suggested that massive production cuts could be on the way as the two countries have agreed to cut approximately 10 million barrels. However, it was not clear whether the cut would be applicable on per day basis.
“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!,” Trump had tweeted on Thursday.
A deal to cut the production, which was raised after the demand of the oil dropped drastically due to the shutdown caused by the COVID-19 pandemic, had collapsed last month.
Since then, the price of crude oil has dropped to its lowest in the past two decades. This plunge was caused because both Russia and Saudi Arabia slashed their oil prices and increased their production as they began their competition to enhance their market share
Their price war coupled with the pandemic led to a fall in demand, which also affected the US oil market that hit its worst quarter on record. Their prices plunged by two-thirds in the first three months of the year.
Meanwhile to meet an agreement, Saudi Arabia has called for an OPEC+ meeting to stabilise the oil market. As of now, it is not clear who all will be attending the meeting.
Some experts believe that such a major deal was in reach while some others feel that the deal ‘sounds too good to be true’ in which the two major oil producers would happily cut their oil production, especially when market is facing an oversupply 25 million barrels a day.