US Energy Secretary: oil price war should end this week
The oil price war should hopefully end this week, US Energy Secretary Dan Brouillette has said after speaking to his Saudi and Russian counterparts. The US is encouraging Saudi Arabia to convene a meeting of G20 energy ministers and US officials have considered imposing tariffs upon Russian and Saudi oil to persuade the two sides to end the price war.
The news comes as Kirill Dimitriev, a senior Russian negotiator and head of Russia’s Direct Investment Fund, has said that Russia and Saudi Arabia are close to arriving at a deal. “I think the whole market understands that this deal is important and it will bring lots of stability, so much important stability to the market, and we are very close,” said Dimitriev to CNBC.
Since March, Russia and Saudi Arabia have engaged in a war for a share of the oil market share. With demand falling worldwide amid the covid-19 pandemic, the two sides failed to reach an agreement to curb supply. Riyadh decided to flood the market, increasing its output to over 12 million barrels per day from the start of April.
The price war caused oil prices to plummet to levels unseen since 2002. On Friday, US President Donald Trump claimed to have brokered a deal between the two sides, suggesting they cut production by 10-15 million bpd. Yet, after a brief surge in oil prices, initial optimism gave way to doubt as Riyadh and Moscow traded mutual accusations over the failure of previous agreements.