With just one tweet, U.S. President Donald Trump conjured up the prospect of a global oil alliance to rescue the industry from the worst shock in history. The question is whether it evaporates just as quickly. After the president’s social-media intervention on Thursday, oil traders are frantically assessing whether Saudi Arabia, Russia and possibly even the U.S. — the world’s three biggest producers — are poised to strike a once-unthinkable grand bargain to cut daily supplies in unison by 10 million to 15 million barrels.
Donald J. Trump✔@realDonaldTrumpJust 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!
It’s unclear whether it’s feasible — or even legal — for such a coalition to come together. Or indeed whether it would be enough to tame the tsunami of unwanted crude now bearing down on world markets, which could be two to three times bigger than the cut touted by Trump.
“It’s too little, too late,” said Ed Morse, head of commodities research at Citigroup Inc. “Cuts are required immediately, and unless they happen, the price is going to go down significantly and force them to happen.”