Crude futures rose by 10pc today after US president Donald Trump suggested that Saudi Arabia and Russia may be close to "a deal" to alleviate the oil price collapse.
"Russia and Saudi Arabia at some point are going to make a deal in the not too distant future," Trump said. "Because it's very bad for Russia, it's very bad for Saudi Arabia. It's very bad. I mean, it's bad for both, so I think they're going to make a deal."
The prospect of some kind of agreement to curtail the vast oversupply seen in the crude market since the start of last month sent Ice Brent crude futures soaring. At 09:31 GMT, the front-month contract was up by 10.5pc at $27.35/bl.
But this is still down by around 50pc from levels of a month ago, before the collapse of the Opec+ agreement that triggered a battle for market share just as the coronavirus pandemic began to eat into demand. The IEA said yesterday that this scenario is presenting the oil industry with its worst crisis. Around 5mn b/d of global production is unprofitable at crude prices below $25/bl, and 7.5mn b/d is unprofitable at $20/bl, the agency said.
Trump has previously said that he is considering joining discussions on what the US, Saudi Arabia and Russia could do in response to the collapse in prices, and he spoke with Russian President Vladimir Putin on energy issues this week.
There has been no indication from either Riyadh or Moscow that direct talks have taken place on oil market actions. The most vocal recent proponent of co-ordinated production cuts has been the Texas Railroad Commission, which hopes to hold a meeting on the matter this month
In the absence of any deal — either in Texas, Riyadh or Moscow — Trump suggested that he could intervene: "I think I know what to do to solve it … if [Russia and Saudi Arabia are] unable to solve it, I think I know what to do to solve it," he said, without giving details.
