Trump May Wade Into Oil Fight That Has Rocked U.S. Drillers
Trump said he could intervene in an oil-price war between Russia and Saudi Arabia
(Bloomberg) -- President Donald Trump said he could intervene in an oil-price war between Russia and Saudi Arabia that has left U.S. oil drillers reeling.
For now though, low prices are akin to a tax cut for American consumers, he said. Speaking in Washington at a briefing on the coronavirus pandemic, Trump said he would take action in the oil dispute at the “appropriate time.”
Crude prices rebounded from an 18-year low as Trump made the comments and signs of stress from oil’s collapse emerged in the Middle East.
“We have a lot of power over the situation, and we’re trying to find some kind of a medium ground,” Trump said.
The U.S. shale industry has found itself caught in the middle of a fight over market share between Saudi Arabia and Russia. Talks between the two countries about cutting back production as the coronavirus outbreak saps global demand fell apart earlier this month, triggering an all-out price war that has sent oil futures plunging.
“It’s very devastating to Russia, because the whole economy is based on that, and they have the lowest prices in decades,” Trump said.
“I would say it’s very bad for Saudi Arabia,” he said. “But they’re in a fight, they’re in a fight on price, they’re in a fight on output. At the appropriate time I’ll get involved.”
Trump is facing growing calls from lawmakers to help the domestic oil industry -- which is scaling back operations and is threatened with a wave of bankruptcies -- as his officials adopt a tougher rhetoric against those they see as responsible.
‘Intentional Disruption’
Energy Secretary Dan Brouillette characterized the price war as an “intentional disruption to world oil markets by foreign actors,” in a statement Thursday where he outlined plans to buy as many as 77 million barrels to fill up the nation’s emergency stockpile.
The administration’s plan to aid struggling American shale drillers involves buying as much as $3 billion worth of oil, starting with domestic producers who employ 5,000 people or less.
Trump supporter and shale billionaire Harold Hamm, who said last week he would file a complaint against Saudi Arabia for “illegal” dumping of crude, said Thursday that Senator James Inhofe has asked the Department of Commerce to begin a probe under Section 232 of the Trade Expansion Act.
And North Dakota Senator Kevin Cramer went as far as to call on Trump to ban crude imports from Russia, Saudi Arabia and other OPEC members in response to their recent action to “distort energy markets” when demand is already weak.
Oil industry leaders have urged the Trump administration to find a diplomatic solution. The American Exploration and Production Council said in a March 12 letter that it needs Trump’s help in ensuring “restoration of a functioning, stable, global market for oil.” And the head of the American Petroleum Institute, Mike Sommers, also has encouraged the president to engage with Saudi Arabia and Russia to ensure markets aren’t oversupplied.
©2020 Bloomberg L.P.