In early March, Russia rejected a proposal by OPEC to introduce additional output cuts. As a result, a three-year pact between OPEC and Russia came to an end. In response to this unexpected move, Saudi Arabia slashed its oil prices, thus launching a price war. Moreover, Riyadh said it would considerably raise its daily crude output starting from April. This caused a huge collapse in oil prices, as the global market has already been suffering from oversupply. US President Donald Trump could not stand aside as local oil producers also came under pressure. Trump said he would intervene in the dispute between Russia and Saudi Arabia at the appropriate time. It seems that Washington and Riyadh might enter into a partnership to help stabilize the oil market. The US energy officials are weighing on Trump’s administration to negotiate with the Saudis and push them to cut oil production. Market participants hope that if the US steps in, the situation might improve. Oil quotes have tumbled to their lowest level due to Russia’s withdrawal from OPEC+ and contraction in energy demand. The global demand for oil has sharply dropped amid massive economic disruption caused by the coronavirus outbreak.
