US President Donald Trump, on Monday, said that OPEC had not asked him to order US producers to cut their crude oil output to prevent oil prices from collapsing further. Trump said that US oil production had already declined automatically, anyway.
Major oil producers, including Saudi Arabia and Russia, are expected to seal a deal on cutting oil production at a meeting on Thursday. However, sources informed that such an arrangement would require participation from other non-OPEC producers, particularly the US.
The coronavirus pandemic has destroyed global oil demand and driven prices off a cliff. Analysts estimated global oil demand to have fallen by about 30% or about 30 million bpd due to lockdowns and other measures to combat the disease. At the same time, Saudi Arabia and Russia have pumped extra supply to the market.
The oil price crash threatens the US drilling industry with job losses and bankruptcies, with some of them having already scaled back production. Under normal conditions, boosting oil prices through coordinated production cuts will violate US antitrust laws. However, analysts at Pepper Hamilton LLP said it could be legal if the federal government were involved.
