Once again, U.S President Donald Trump sent the oil market into further orbit, he commented in the session on Thursday saying that he had brokered a deal with top oil producers Russia and Saudi Arabia. Trump noted that they will cut output and that to expect an announcement soon, which resulted in oil prices jumping some 20% in one move when looking at WTI crude.
In our last blog, we detailed how oil markets were propped up early in the day, thanks to comments from Trump overnight. As a reminder, he said to have invited US oil producers to the White House and that he had spoken to both Russia and Saudi Arabia, believing they can make a deal.
Shortly after the Trump announcement, the Saudis signalled that they were on board for an output cut by releasing a statement which called for an emergency OPEC meeting. As a reminder, just days ago, the Saudis blocked an emergency OPEC meeting from happening, so for them to now be calling for a meeting is a big shift. Moreover, shortly after, sources noted that the Saudis might cut production to below 9mln BPD, if other countries join. This would be the biggest cut the Kingdom has ever done to production.
The Russians, however, denied that they had agreed to such a deal, taking some of the sting out of crude’s move higher. Russian President Putin has not spoken to the Saudi Crown Prince Mohammed Bin Salman, said the Press Secretary for the Russian President Peskov. Moreover, no one has started any talks about a potential new oil-producing deal to replace the OPEC+ format, he added. So, despite what Trump might be claiming, the Russians do not sound like they are on board yet.
It is important that we wait until we hear this from Putin himself before jumping to any conclusions, after all, there is always a public stance and a private stance. If nothing official comes out in the form of willing cooperation from both Saudi Arabia and Russia to agree on cuts, then this move could be given back. Any rallies will likely remain vulnerable until actual progress is made towards a deal being struck.
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