U.S. President Donald Trump was so intent on saving the American oil industry that he told the Saudi crown prince that unless the Kingdom stopped the oil price war and got OPEC+ together for a new round of cuts, the Trump Administration may not be able to prevent legislation to pull American troops out of Saudi Arabia, Reuters reported on Thursday, citing four sources with knowledge of the matter.
President Trump spoke on the phone with Saudi Crown Prince Mohammed bin Salman on April 2, as the president himself said on Twitter that day, sending oil prices surging by 25 percent after saying that he hoped Saudi Arabia and Russia would cut 10 million bpd, or probably even 15 million bpd, to prop oil prices.
According to sources with knowledge of the entire phone conversation between President Trump and the Saudi Crown Prince, President Trump threatened to shake up the strategic – including military – alliance between the United States and Saudi Arabia if the Saudis were to continue pursuing their oil price war for market share that had severely depressed oil prices, on top of the crashing demand.
The message of the U.S. Administration to Saudi Arabia, through various channels, was basically “We are defending your industry while you’re destroying ours,” a senior U.S. official told Reuters.
In early April, just hours after the diplomatic push from President Trump and his hint at a massive production cut, Saudi Arabia scrambled to put out a statement, via its official Saudi Press Agency, calling for an emergency meeting of the OPEC+ nations and all other major producers not part of the format, in order to discuss ways to support the crumbling oil prices amid crashing demand.
“This invitation comes within framework of the Kingdom's constant efforts to support the global economy in this exceptional circumstance, and in appreciation of the US President's request and the US friends' request,” Saudi Arabia said on April 2.
The rest, they say, is history. Ten days later, after four days of wrangling over quotas, baselines, and why Mexico should be spared most of its share of the cuts, the OPEC+ group came up with a new deal to remove 9.7 million bpd from the market in May and June, then ease the cuts to 7.7 million bpd for July to December 2020, and then further to 5.8 million bpd until the end of April 2022.
By Tsvetana Paraskova for Oilprice.com
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