Who Will Win The Oil Price War?

Who Will Win The Oil Price War?

Who Will Win The Oil Price War?

The US president's interest in changing the situation on the oil markets is due to frustration over another setback on the road to energy independence, Dr Cyril Widdershoven, a veteran global energy market expert and advisor at several worldwide think tanks, believes.

Companies like Continental Resources and Devon Energy, whose share prices were already under pressure, saw their market values cut in half after the outbreak of the price-war between Saudi Arabia and Russian Federation.

Oil has been whipsawed this week as investors weigh further stimulus measures to combat the impact of the coronavirus pandemic against collapsing demand and an impending supply flood from the world's biggest crude producers.

"Such extraordinary excesses remind that, in the short term, neither Opec cuts nor strategic petroleum inventory builds could come close to balancing the market", says Stuart Joyner, an energy specialist at Redburn.

United States laws block a formal deal but if Texas does it voluntarily and then OPEC follows up with something similar, it would be de-facto the same.

Sitton, one of three voting members of the commission, is proposing that the US coordinate with Russian Federation and Saudi Arabia to curb supply. As long as the USA shale oil industry remains insecure and non-sustainable, Washington is dependent on external crude sources and hence can't fulfil its "long dream of less engagement in global geopolitics", the expert adds.

Many experts view this as little more than a temporary fix, however. "While this support could prove lasting in [the second half of 2020], the accompanying supply cuts would remain much too small to offset the current 8 million bpd hit on demand from coronavirus".

As global trade has ground to a halt, factories have gone dark, and airlines have been grounded by closed borders, the demand for oil products has fallen through the floor.

Saudi Arabia's Crown Prince Mohammad bin SalmanThe United States believes Saudi Arabia's flooding of oil markets compounds the coronavirus-caused global economic crash and intends to send a senior official to Riyadh for months to boost efforts to stabilize energy markets, senior US officials said on Friday.

Oil is Russia's top export commodity and accounts for a large portion of its budget revenue.

A deal is therefore in the interest of both countries. "It would stave off a total oil industry meltdown".

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