Oil rockets as Trump signals end to price war

Energy Prince Abdulaziz bin Salman Al Saud and Russia's Energy Minister Novak are seen at the beginning of a meeting in Vienna

There's just one problem - Russian Federation is denying both the agreement and the fact that a call between Putin and the crown prince even took place. "We are discussing this with colleagues both here, domestically, and internationally with our partners in OPEC, and most recently I discussed this issue with the president of the United States", Putin said at that meeting.

Exactly what arrangement had been reached between Riyadh and Moscow was unclear, but oil prices shot up after Trump's tweet, along with the stock market, which as of 1 p.m. was up nearly 2 percent - on a day when the Labor Department reported that new unemployment claims from the previous week had exceeded 6 million, an order of magnitude above even the levels of the 2009 financial crisis.

He said he had been told this by Saudi Crown Prince Mohammed bin Salman, who had spoken to Russia's President Putin.

Saudi Arabia said it would call an emergency meeting of the Organization of the Petroleum Exporting Countries (OPEC), Saudi state media reported.

The Saudi Press Agency reported Thursday that the kingdom is calling for "an urgent meeting for OPEC+ group and other countries", which would include Russian Federation, "with aim of reaching a fair agreement to restore the desired balance of oil markets".

In the briefing, Trump also confirmed that he is going to meet with oil companies on Friday and with independent oil producers between Friday and Sunday.

"Oil prices failed to keep pace, with growing (coronavirus) lock-down measures and reports that this could drive global demand down 20%, potentially pushing the world to run out of storage capacity", Morgan Stanley analyst Devin McDermott had written in a note earlier this week. Without a slowdown in production, there would soon be nowhere to put the oil coming out of the ground. But he expressed doubt that any agreement to coordinate production would be of much use. The pandemic has worsened since, freezing economic activity and sending oil prices into a tailspin as producers confronted the prospect of a dramatic fall in demand with a flood of unwanted oil supply. "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!"

Slashed global demand, along with the price war, sent oil prices to their lowest levels in 18 years this week. "With the transport cost it means that the price is negative", Per Magnus, head of analysis at Rystad Energy, told AFP. "You're going to lose an industry over it. Thousands and thousands of jobs".

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