There’s no doubt about it, it has been a rough week for oil. Just days after Saudi Arabia and Russia launched a full-blown oil war, forcing prices to drop by 25% in a single day, the U.S. President declared a travel ban for all flights to Europe. And now, the President has declared a National Emergency. But there was also some bullish news for oil markets in Trump's speech, sending oil prices upward.
Trump's statement came as a number of public and private businesses have already taken action. Major sporting leagues, conferences and public events have already been canceled, and schools across the nation had already been shut down in an attempt to slow down the spread of the virus.
Trump said, "To unleash the full power of the federal government, I am officially declaring a national emergency. Referring to that as "two very big words," adding that it would allow him to unlock up to $50 billion in funds "in our shared fight against this disease."
"We have very strong emergency powers under the Stafford Act," Trump said. "I have it memorized, practically, as to the powers in that act. And if we need to do something, I'll do it."
President Trump also announced that the U.S. government will buy ''large quantities of crude'' for the Strategic Petroleum Reserve mentioning that this would save the taxpayer billions of dollars, while helping out the oil industry, and working towards the goal of energy independence.
Wall Street rallied on Friday's opening bell, at first skyrocketing around 1,200 points following the markets' worst day since Black Monday accident in 1987.
The emergency announcement arrives in the wake of Trump’s many efforts to lessen the public's fear of Covid-19’s. Recently, the President has argued that the seasonal flu causes more deaths than the virus, and claimed Democrats’ criticisms of his administration’s response were overblown.
By Michael Kern for Oilprice.com
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Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London