Oil Surges Record 24% After Trump’s Tweet on Saudi Production Cuts

Oil Surges Record 24% After Trump’s Tweet on Saudi Production Cuts

April 3, 2020

Yesterday, oil rallied more than 24% after President Trump tweeted that he had spoken with Crown Prince of Saudi Arabia Mohammed Bin Salman and expects Saudi Arabia to cut production by 10 million barrels. The jump in crude futures was oil’s largest single-day percentage gain in history, sprung by the prospect of a truce in the ongoing oil price war between Russia and Saudi Arabia that has devasted the oil market amid the major demand slump caused by the coronavirus.

According to Forbes:

After Trump’s comments this morning, Saudi Arabia indicated that it will consider cutting its output to less than nine million barrels a day down from 12 million barrels a day as long as other G-20 nations also make cuts. 

Over the last few weeks, the pressure on the oil market has boiled down to supply and demand: demand for fuel has plummeted as people around the world stopped traveling and working as a result of the coronavirus, and supply will skyrocket as Saudi Arabia and Russia ramp up production and cut prices.

Today, Trump met with the heads of some of the largest U.S. oil companies to discuss measures to help the industry weather the recent crash in the market. There are deep divisions among the various factions in the industry over what should be done; however, one common thing they can unify together on is for Trump to call for Saudi Arabia and Russia to stop the price war.

A meeting of OPEC+ oil cartel members is set for Monday. We are hopeful that today some common ground was met to provide relief to the oil industry and President Trump will find agreement with foreign leaders next week on how to move forward during this time of market turbulence.