Brent crude rallied nearly 12 per cent on hopes of a supply deal among major oil producers led by Saudi Arabia and Russia to alleviate a price collapse triggered by the coronavirus outbreak.
US president Donald Trump said he had spoken in recent days with the leaders of Russia and Saudi Arabia and believed a deal to end a price war — that has taken Brent to the lowest level since 2002 — would be made in “a few days”.
Saudi Arabia had pushed for a deal to deepen and prolong production curbs ahead of a March meeting of oil ministers, but it was met with reluctance by Russia. This prompted Saudi Arabia to pursue a ‘pump at will’ strategy to shock the market, cutting prices for its crude and raising production to record levels.
“I think that they will work it out over the next few days . . . Both know what they have to do,” Mr Trump told a White House press conference on Wednesday, without giving any further details as to why he was so confident a deal would emerge.
Brent crude, the international oil benchmark, rose by $2.88 to $27.64 a barrel. US benchmark West Texas Intermediate climbed $2, or 9.9 per cent, to $22.31 a barrel.
Saudi Arabia and Russia have both backed co-operation, yet it seems there is little sign of a strategy shift just yet. The kingdom raised production to above 12m barrels a day, its maximum level, on Wednesday.
People close to the kingdom say the world’s biggest oil exporter still wants a deal, but any production curbs would need to be shared between all producers, including Russia.
Some market analysts have said the demand collapse is so severe, amid global lockdowns and travel bans, that any supply cuts from major producers would have a limited impact.
Mr Trump also said he would meet US oil executives to discuss other measures by which to aid the industry that is suffering after an oil price collapse.