U.S. Looks to Intervene in Saudi-Russia Oil Standoff

U.S. Looks to Intervene in Saudi-Russia Oil Standoff

March 20, 2020

Yesterday, President Trump ordered the Energy Department to start buying crude oil to fill the country’s Strategic Petroleum Reserve. The DOE announced it would start soliciting bids on 30 million barrels, with more to follow until the reserve adds 77 million total barrels.

The applaudable action by President Trump allowed our government to assist the industry during the recent market disruptions, while also allowing the government to fill the reserve at discounted prices. This is the first step the administration has taken to assist the oil industry. 

According to The Wall Street Journal:

Administration and industry officials see diplomatic action as necessary to get Russia and Saudi Arabia to back down from flooding the markets with supply. The two countries this month ended a three-year pact to limit production and stabilize prices, leading Saudi Arabia to raise output to records and slash its prices to compete for shrinking global demand.

The U.S. would ask the Saudis to return to their original, lower production levels before that decision, an administration official familiar with the matter said. The administration could use the threat of sanctions on Russia as part of its engagement with Saudi Arabia to assure the kingdom its rival Russia won’t easily benefit from Saudi cutbacks, the administration official said.

Either way, possible sanctions against Russia are in the works, the administration official and a second person familiar with the matter said, although the details of those possible sanctions and what Russian action might trigger them weren’t available.

The growth of our energy sector has brought the US from a nation dependent on imported oil to a net exporter and now the world single largest producer of oil and gas, securing America’s energy independence and a position of power in global diplomacy. During these times of market uncertainty, it is important to defend the global influence and national security that the oil and gas industry has provided to our country.