Hopes are building for a truce in the brutal oil price war between Saudi Arabia and Russia, setting off a record spike in the oil market Thursday.
President Donald Trump suggested massive production cuts could be on the way and Saudi Arabia called for an “urgent” meeting between OPEC, Russia and other unnamed nations to restore “balance” to the oil market.
Even though no date has been set for such a meeting — and no deal on cutting production has yet been announced — the oil market celebrated wildly.
A wave of oil bankruptcies is on the way
US oil prices soared as much as 35% to $27.39 a barrel after Trump said on Twitter that he hopes and expects Saudi Arabia and Russia will slash output by between 10 million and 15 million barrels per day. Crude closed with a surge of 25% to $25.32 a barrel. That exceeds the previous one-day record that was set exactly two weeks ago.
Trump’s tweet followed a call with Saudi Crown Prince Mohammed bin Salman.
“If it happens, will be GREAT for the oil & gas industry!” the US president tweeted.
Saudi Arabia and Russia have been locked in an epic price war since early March, flooding the oil market with cheap crude just as demand is cratering because of the coronavirus pandemic. Crude has crashed to 18-year lows, crushing American oil companies and energy stocks.