US President Donald Trump announced Thursday that Russia and Saudi Arabia have reached an agreement to raise the price of oil by reducing supply with a cut of between 10 and 15 million barrels, which it automatically caused a positive reaction in the markets.
«I just talked to my friend MBS (initials of the Saudi crown prince, Mohamed bin Salman), who has spoken to President (Vladimir) Putin, and I hope they will cut about 10 million barrels and perhaps somewhat substantially more, which, if it happens, will be EXCELLENT for the oil and gas industry! “said the president on Twitter.
Then, Trump specified that the cut could be up to 15 million barrels.
The declarations of the US president caused future oil prices to shoot up 25% to reach $ 30 a barrel in the case of the Brent type.
In the last weeks oil prices had dropped to levels not seen since 2002 due to the reduction of economic activity due to the coronavirus and as a result of the rupture of an agreement that Moscow and Riyadh were maintaining to keep the oil supply limited.
The breakdown of that agreement occurred on March 6 in Vienna, when a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, ended without agreement due to Moscow’s refusal to give the green light to a new cut in pumping to counter the drop in demand caused by the pandemic.
The 23 countries that produced the cartel did not even manage to agree to a prolongation of the current cuts that thus expired on March 31, so from April 1 each can produce the volumes they want and can.