Trump foresees Saudi and Russian oil policy change, will meet with US oil executives

President Trump is scheduled to meet with US oil industry executives Apr. 3 at the White House to discuss what more can be done as oil companies struggle with a severe market depression.

Trump announced Apr. 2 via Twitter that he expected a crude oil output cut of 10 million bbl or more through joint action by Saudi Arabia and Russia. The mid-morning tweet was after a discussion with Crown Prince Mohammed bin Salman of Saudi Arabia.

“Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!” Trump tweeted.

“Could be as high as 15 Million Barrels. Good (GREAT) news for everyone!” Trump added.

The market reacted immediately with a jump of about $4/bbl for the New York Mercantile Exchange futures contract for light sweet crude, pegged to West Texas Intermediate. By mid-afternoon, prices fluctuated $1.50-3/bbl above pre-tweet levels.

President Trump’s action drew praise in a statement released by Erik Milito, president of the National Ocean Industries Association, whose members develop offshore oil and gas fields.

“While we still have a long way to go to ensure the survival of US energy businesses and jobs, today brings a bit of hope,” Milito said.

Meeting oil executives

Trump was set to meet Apr. 3 with several oil executives at the White House. There is currently no unanimity within the industry about what the government should do.

Several US oil executives and members of Congress from oil-producing states have asked Trump and Commerce Secretary Wilbur Ross to consider a range of market interventions. Ideas include oil import tariffs, full import bans, bans on specific types of crude, and federal royalty relief, among others.

Harold Hamm, executive chairman of Continental Resources Inc., has been prominent among those calling for import tariffs to counter what he calls “dumping.”

Crude oil import restrictions typically have been opposed by US refiners and the largest US oil companies.

The White House meeting is expected to include a range of voice from the oil industry, including representatives from large oil producers and refiners.

Observers also have been reminding politicians and regulators that US states resorted to restrictions on oil production via prorationing from the 1930s through the 1960s. The rationale was that overproduction hurt state revenues and wasted natural resources, a problem severe in the 1930s and then gradually diminishing over the following three decades.