Expert comment: Oil prices02 April 2020
Dr Jorge Guira, associate professor of law at the University of Reading, said:
"Trump is trying to avoid a slide to even lower oil prices by speaking to the leaders of Saudi Arabia and Russia. He has few options.
"Saudi Arabia will announce on April 5 its price direction for May and that will indicate if a floor is at least being placed on prices for now. They have a strong interest to keep pumping up to 13 m barrels to make up for public revenue shortfalls.
"Trump has few good tools right now. He is unlikely to pull all US forces out of Saudi Arabia, and can help bail out many firms in the oil patch thereby weakening the Saudi end game of driving US shale into the ground. It will be hard for Trump to convince Saudi Arabia that this is an exercise in self harm after they have staked so much for an all in strategy.
So this likely does not solve the short term re-pricing of oil that Trump wants and Texas Regulatory Commission proposals to cut production may raise WTI but not necessarily have a big impact on Brent.
"Some modest accommodation on April 5 is possible but whether that can happen and is enough, remains to be seen.
"There has also been an idea floated of the US imposing a tariff on Saudi oil but that is unlikely to be fully effective as a lever."