There has been no letting up in the oil price war despite the intense demand destruction caused by the global Covid-19 pandemic that has now reached Europe and the United States. There have been rumblings about the United States getting involved in the war, pleading with Saudi Arabia to reassure the market that it will not flood it with oil. So far, all indications are that those requests are falling on deaf ears, with Riyadh set, as of April 1, to flood the market. Russia has positioned itself to ramp up production, too, but to a lesser extent.
Many were hoping that the G20 talks would include discussions about oil supplies and prices, but before the meeting, Russia said that the issue was not on the agenda. G20 was going to be MBS’ big grandstanding for his new post-Khashoggi reputation as a good guy, and most thought that this wouldn’t go hand-in-hand with inadvertently destroying the US shale patch. However, with the coronavirus pandemic, the G20 lost its luster, so he will wait for a better opportunity.
As a result of the oil price war combined with the pandemic’s stripping of global demand, oil prices continue to trade in a low range, with WTI currently trading around $22 per barrel, bolstered in part by the stimulus bill that the Senate managed to pass earlier this week.
For now, Saudi Arabia has little incentive to stop the oil price war. Yes, prices are dangerously low, but it’s also producing more to boost…