Oil prices rally on Trump’s tweet that production cuts are coming
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Oil prices have rallied after US President Donald Trump claimed that he expected Saudi Arabia and Russia to substantially cut their oil production after speaking with the leaders of both countries.
In yet another of his often controversial tweets on Twitter, President Trump said he expected the two countries to cut oil production by about 10 million barrels, or about 10 per cent of normal global consumption.
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!
— Donald J. Trump (@realDonaldTrump) April 2, 2020
He later added that the cut could be as high as 15 million barrels.
While the US president’s tweets often draw disbelief, there might be some truth behind the latest announcement after state-run Saudi Press Agency reported that the kingdom had called for an urgent meeting of Organization of the Petroleum Exporting Countries and other countries to reach “a fair agreement to restore the desired balance of oil markets”.
Somewhat predictably, a spokesperson for Russian President Vladimr Putin denied that there were any conversations between the two leaders.
Regardless of how valid President Trump’s comments were, they sent the benchmark West Texas Intermediate crude up about 25 per cent to a high of $US24.96 ($41.18) per barrel.
Likewise, the Brent crude benchmark, which prices about two thirds of the world’s internationally traded crude oil supplies, is up more than 20 per cent to $US29.94 per barrel.
This news is likely to be welcome by US shale oil producers.
Markets were also bolstered by the claim, with the US S&P 500 rising more than 2 per cent while the local S&P ASX Energy index is up 5.17 per cent to 6,683.3 points.
Here are how the small cap oil and gas players on the ASX performed: