President of the United States Donald Trump has given an ultimatum to Saudi Crown Prince Muhammad Bin Salman, either to cut oil or lose US military support.
Media reports said that Donald Trump told Saudi Crown Prince that unless the Organization of the Petroleum Exporting Countries (OPEC) started cutting oil production, he would be powerless to stop lawmakers from passing legislation to withdraw U.S. troops from the kingdom.
The effort illustrated Trump’s strong desire to protect the U.S. oil industry from a historic price meltdown as governments shut down economies worldwide to fight the virus.
Earlier US Oil Prices plunged below zero for the first time in history as demand for energy collapses amid the global pandemic and traders sought to avoid owning crude with nowhere to store it.
It was nearly $60 at the start of the year, before business-shutdown orders swept the world and idled factories, offices and automobiles.
Much of the drop was chalked up to technical reasons — the May delivery contract is close to expiring so its trading volume was light, which can exacerbate swings. But prices for deliveries even further into the future, which were seeing larger trading volumes, also plunged. Demand for oil has collapsed so much that facilities for storing crude are nearly full.
Tanks could hit their limits within three weeks, according to Chris Midgley, head of analytics at S&P Global Platts. And traders are willing to pay someone else to take that oil for delivery in May and shift the burden of figuring out where to keep it.
Benchmark U.S. crude oil for June delivery, which shows a more ”normal” price, fell 16.5% to $20.90 per barrel. Big oil producers have announced cutbacks in production in hopes of better balancing supplies with demand, but many analysts say it’s not enough.