Oil surges 20% after Trump tells CNBC Saudis, Russia reach production cut agreement

Oil prices skyrocketed on Thursday after President Donald Trump told CNBC Saudis and Russia will ease pressure on oil, ending a price war that has contributed to crude’s massive plunge.

West Texas Intermediate crude futures surged 24.4%, or $4.99 to trade at $25.30 per barrel. Earlier in the session WTI traded as high as $27.39. International benchmark Brent crude jumped 22%, or $5.46, to trade at $30.21 per barrel.

Trump told CNBC’s Joe Kernen Thursday that he spoke to President Putin yesterday and Saudi Crown Prince Thursday and expects them to announce an oil production cut of 10 million barrels and could be up to 15 million.

The president later tweeted that a production cut would be “great for the oil & gas industry!” His comments came before a meeting with energy industry executives scheduled for Friday. The details of the production cut remain unclear, and RBC’s global head of commodity strategy Helima Croft noted that the U.S. could have to give up something in return.

“What we know is the Saudis were looking at this through the lens of the financial crisis and believe they needed a response commensurate to 08/09,” she said. “The question is can Trump put together the package that gets them to do that?,” Croft said. “We know there’s an emergency OPEC meeting. They will be looking for signs that U.S. production will be curtailed. They will be watching what happens with the Texas Railroad Commission and with Canada.”

OPEC countries led by Saudi Arabia proposed last month a production cut of 1.5 million barrels per day as demand waned. However, OPEC ally Russia rejected the cut, sparking a price war between the two powerhouse producers. The production cuts that were previously in place expired on March 31. On Wednesday, Saudi Arabia ramped up its production to more than 12 billion barrels per day.

The shock to both the demand and supply side has sent oil prices tumbling. On March 6, U.S. crude was trading above $41 per barrel. Since then, crude has lost about half of its value.

Oil surges 20% after Trump tells CNBC Saudis, Russia reach production cut agreement, CNBC, Apr 2