Russia and the USA have agreed. Does the price war end?

US, WASHINGTON (ORDO NEWS) — The Kremlin’s press service announced a telephone conversation between Russian President Vladimir Putin and US President Donald Trump, during which leaders discussed the situation on the world oil market, falling oil prices to a record low over the past 18 years and agreed to hold bilateral ministerial consultations energy.

The agreement marks a new turn in global oil diplomacy, as the failed OPEC-Russia deal to cut production earlier this month led to a price war between Russia and OPEC’s actual leader, Saudi Arabia.

“An exchange of views was also held on the current state of the world oil market. An agreement was reached on holding Russian-American consultations on this subject through energy ministers, ”the Kremlin said in a statement.

White House spokesman Judd Deere said the two leaders emphasized the importance of ensuring stability in global energy markets. He also noted that the coronavirus pandemic contributed to the fall in oil prices to historic lows, which threatens the bankruptcy of oil companies around the world.

A spokeswoman for the US Department of Energy, Shailene Hines, said US Energy Secretary Dan Brulee will speak with Russian Energy Minister Alexander Novak about “how major oil producing countries can solve the problem of instability in world oil markets.”

The Kremlin did not say what the ministers would discuss, but Moscow had previously made it clear that it would like more countries to join forces to balance global oil markets.

Shortly before the telephone conversation with the Russian leader, US President Donald Trump said that Saudi Arabia and Russia “went crazy” in their price war.

“I never thought I’d say that, but maybe we need to increase oil prices. The price is too low, ”Trump said.

Market recovery

Against the background of such statements on Tuesday, oil prices, pushing from the lowest levels over the past 18 years, began to rapidly gain height. Recall that the decline in prices is due to the coronavirus pandemic and the low demand for fuel worldwide.

File Reuters

The cost of Brent crude oil rose by 1.3% to $ 23.06 per barrel compared with the close of trading on Monday, when it fell to the level of November 2002 – $ 22.76 per barrel.

The cost of WTI crude oil also increased by 6%. It amounted to $ 21.30 per barrel compared to the close of trading on Monday, when the price dropped to the level of February 2002 – $ 20.09 per barrel.

Oil markets were simultaneously confronted with the coronavirus pandemic and the price war between Saudi Arabia and Russia after OPEC and other oil-producing countries failed to agree on further reductions in oil production to balance prices in early March.

Experts hope that the economic recovery in China will spur oil demand.

Meanwhile, refineries began to bring oil production to the pre-crisis level, but an increase in production may be in vain amid falling demand around the world.

Excess resources

Standard Chartered Bank analysts expect the average price of Brent crude in the second quarter to be $ 23 per barrel. According to their forecasts, oil demand in April will fall by 18.5 million barrels per day, and not by 10.5 million barrels, as previously stated.

The reason for the change in the forecast was the introduction of global quarantine due to the coronavirus pandemic.

In 2020, Standard Chartered Bank analysts expect a drop in oil demand by a record 5.43 million barrels per day.

“Strict global restrictions as part of special measures to combat coronavirus have lowered our expectations regarding oil demand,” analysts say.

According to the forecasts of Standard Chartered Bank analysts, the excess of oil will daily be 21.8 million barrels in April, 19.5 million barrels in May and 13.7 million barrels in June.

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The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.