The Strategist

US intervenes in oil prices war between Russia and Saudi Arabia

03/26/2020 - 02:37

The US Secretary of State spoke on the phone with the Crown Prince of Saudi Arabia, urging him to calm the world’s energy and financial markets. Thus, the United States has intervened in a price war between the kingdom and Russia, writes Bloomberg.

Gary Bembridge via flickr
Gary Bembridge via flickr
The United States directly intervened in the price war between Saudi Arabia and Russia, urging Riyadh to calm the energy and financial markets in times of economic uncertainty, writes Bloomberg.

Before the G20 Leaders' Conference, US Secretary of State Mike Pompeo spoke with Crown Prince Mohammed bin Salman. According to a statement of U.S. State Department, Pompeo emphasized that Saudi Arabia has a real opportunity to reassure global energy and financial markets in the face of severe economic uncertainty.

According to the statement, Pompeo and bin Salman expressed "deep concern" about the coronavirus pandemic and emphasized the need for joint work by all countries to contain the outbreak, CNBC reports.

The price war started after the deal to reduce oil production in the OPEC + format failed. Russia and Saudi Arabia, the key OPEC country, have agreed neither on a new reduction in production, nor on the extension of the transaction on the same terms. Saudi Arabia, after the negotiations failed, offered European consumers large volumes of oil at reduced prices. After that, the price of oil fell by a third.

Russia is confident that it will be able to withstand this "price war" longer than Riyadh, and Vladimir Putin will not make concessions because of the "oil blackmail" of Saudi Arabia, Bloomberg wrote last week. Some traders told the agency that the oil price could fall below $ 20, the most negative forecasts allow a fall to $ 5-10 per barrel.

The US position is that an excess of oil worsens economic forecasts, and therefore, Washington wants all countries to work together to resolve the problem, writes Bloomberg, citing an American official. The agency’s interlocutor added that the United States and Saudi Arabia work closely together when it comes to improving economic conditions.