Oil prices rallied Thursday after U.S. President Donald Trump hinted that his Russian counterpart, Vladimir Putin, and Crown Prince Mohammed bin Salman told him they might reduce crude production.
Trump said in a tweet Thursday that he “spoke to my friend MBS (Crown Prince), who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels.”
The tweet and his comments on CNBC Thursday sparked a rally.
The Dow Jones industrial average jumped more than 500 points after Trump’s remarks. The president’s bold talk provides a reprieve to a beleaguered oil industry, which saw the price of oil fall roughly 60% over the past month.
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!
— Donald J. Trump (@realDonaldTrump) April 2, 2020
Oil prices surged 25%, etching out their best stock trading ever. Chevron and ExxonMobil, for their part, jumped 8% and 5%, respectively. (RELATED: ‘This Is Masochism’: Russia Wages An Oil War Against Saudi Arabia, US Amid Coronavirus Concerns)
Prices fell into the $30s on March 9 after the Saudis pushed for a cut in output to prop up prices, while Russia decided to infuse the market with hundreds of thousands of barrels of oil. Moscow is worried that the U.S. will use shale oil to take advantage if Saudi Arabia ease off production.
Analysts say the oil industry is desperate for good news.
“This glimmer of hope in oil prices is being fully embraced by the oil and stock markets,” John Kilduff, a founding partner of Again Capital, told The Washington Post. “But it’s still a steep climb before any of this to pans out in improved outlook for any of the stocks markets.”
The bump in oil prices comes amid grim news for the economy and the country as a whole. More than 10 million Americans filed for unemployment benefits after government officials effectively shutdown the United States to slow down coronavirus, or COVID-19.
COVID-19 originated in China and is responsible for the deaths of thousands of people worldwide.
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