Oil producer group OPEC and its partners will reportedly hold an emergency virtual meeting on Monday, with all members of the energy alliance expected to take part in an effort to stabilize markets.
It comes less than 24 hours after President Donald Trump told CNBC that he expected OPEC kingpin Saudi Arabia and non-OPEC leader Russia to take up to 15 million barrels of crude off the market.
Brent settled up more than 21% on Thursday, registering its best day since contract inception in 1989, while WTI closed up over 24%, also marking its best-ever daily rally. It leaves both benchmarks on pace for their best week since January 2009, although, year-to-date, Brent and WTI are still down more than 54%.
On Friday, Azerbaijan’s energy ministry said a virtual meeting between OPEC producers and non-OPEC partners, an alliance sometimes referred to as OPEC+, had been scheduled for April 6, according to the RIA news agency.
OPEC was not immediately available to comment when contacted by CNBC Friday morning.
Trump said via Twitter on Thursday that he expected OPEC+ to cut approximately 10 million barrels of oil, “which, if it happens, will be GREAT for the oil & gas industry!”
Around 30 minutes after his first tweet, Trump then suggested the deal “could be as high” as 15 million barrels. This would be “great news for everyone!” he added.
Oil production is typically discussed in terms of barrels per day, but Trump made no reference to the time frame of the cuts. Additionally, it was not clear how the cuts would be distributed across oil-producing countries.
“Donald Trump’s tweet … It’s nonsense, really,” Patrick Armstrong, chief investment officer at Plurimi Investment Managers, told CNBC’s “Squawk Box Europe” on Friday.
“There is no way that Russia and Saudi Arabia are going to cut production by 50%, which is the midpoint of the 10 to 15 million barrels per day he was talking about,” he added.
The U.S. president claimed via Twitter on Thursday that he had spoken with “his friend,” Saudi Crown Prince Mohammed bin Salman, who in turn had spoken with Russian President Vladimir Putin, and he hoped they would both orchestrate an output cut.
Putin’s spokesperson, Dmitry Peskov, told Interfax news agency on Thursday that the Russian leader did not speak with his Saudi counterpart, as Trump had claimed.
“Maybe he spoke to them, maybe there is a deal,” Plurimi Investment Managers’ Armstrong said. “I think the market reacted to the tweet as if we would be seeing 15 million barrels per day coming off of the market and that’s not going to happen.”
Analysts have told CNBC that for OPEC+ to agree to a meaningful production cut, the U.S. would most likely have to give up something in return.
Timothy Ash, senior emerging markets strategist at Bluebay Asset Management, said there will be no deal on oil unless Putin “gets exactly what he wants.”
And, what Russia’s leader wants from the U.S., Ash continued in a research note, “is firm assurances that sanctions will be rolled off, and he also wants Trump to bring him back into the A team of global leadership, G8, or even better some G2/3 leadership session.”
How did we get here?
The coronavirus pandemic has meant countries around the world have effectively had to shut down, with many governments imposing draconian measures on the daily lives of hundreds of millions of people.
The restrictions have created an unprecedented demand shock in energy markets, just as a price war broke out between powerhouse producers Saudi Arabia and Russia.
Russian Energy Minister Alexander Novak and Saudi Energy Minister Abdulaziz Bin Salman sign documents during a ceremony following a meeting of Russian President Vladimir Putin with Saudi Arabia’s King Salman in Riyadh, Saudi Arabia, on October 14, 2019.
ALEXEY NIKOLSKY | SPUTNIK | AFP via Getty Images
Last month, Saudi Arabia recommended cutting production by 1.5 million barrels per day as the coronavirus outbreak curbed demand.
However, Moscow rejected the proposal, thus bringing an end to the group’s three-year production-cutting pact on March 31.
“Put simply, there is skepticism that both sides will call (a) truce on their spat,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note.
“Moreover, it is worth bearing in mind that the enormous supply cuts mentioned by Donald Trump would still fall woefully short of eliminating the crippling oversupply,” he added.
— CNBC’s Pippa Stevens contributed to this report.