"We don’t want to lose our great oil companies," Trump told reporters at the White House on Wednesday. "I think that Russia and Saudi Arabia are going to make a deal in the future … I think they’re going to make a deal."
Last month, Saudi Arabia initiated a price war with Russia when negotiations for a reduction of oil production between Russia and the Organization of Petroleum Exporting Countries (OPEC) fell through and Riyadh offered discounted oil to certain Western states. Oil prices, already historically low, plummeted to prices not seen in decades, with West Texas Intermediate selling for $21.38 a barrel and Brent Crude for $24.74 on Wednesday.
With travel and economies grinding to a halt amid the COVID-19 pandemic, oil supplies are in excess, even as the US buys up huge quantities to refill its strategic reserve.
“Global inventories will be chock full by mid-May. I think the market can continue to decline further,” Gene McGillian, a broker and oil analyst at Tradition Energy, told CNBC on Wednesday. “There’s no signs of reproachment with producers and with further demand destruction we could get another $5 taken from the market."
Credit ratings agency Moody's concluded in a report last week that Moscow could ride out the crisis on its large foreign exchange reserves, suffering a budget deficit of less than 1% this year. A much smaller proportion of Russia's exports are hydrocarbons than those of Saudi Arabia or many other competitors.
The Financial Times on Wednesday hailed Saudi Arabia's gamble as a "game theory masterstroke," noting that once prices begin to rise again, it will force the "competing fringe of higher-cost producers" to shell out money on more efficient extraction methods. This would make them more vulnerable to a sudden price crash, which an oligopoly like OPEC could easily engineer.
Trump said he plans on meeting with oil companies and producers this weekend.