President Trump suggested Thursday that his administration is considering mediating in the Saudi Arabia-Russia oil price war to strike a deal that would help reverse a price crash.
“I spoke with numerous people that have a lot to do with it,” Trump said at a White House briefing. “And we have a lot of power over the situation. We’re trying to find some kind of a medium ground. At the appropriate time I’ll get involved.”
Oil prices have tumbled as the coronavirus pandemic has caused slowdowns in travel at the same time that Saudi Arabia is flooding the market with cheap crude in retaliation for Russia deciding to break from a multiyear pact to cut production to raise prices.
U.S. government officials have blamed Russia for the dispute, accusing Moscow of seeking to damage U.S. shale companies that have been forced to cut capital spending, reduce dividend payments to shareholders, and furlough workers.
“You know, it’s very devastating to Russia because when you look, their whole economy is based on that, and we have the lowest oil prices in decades, so it’s very devastating to Russia,” Trump said. “I would say it’s very bad for Saudi Arabia, but they’re in a fight. They’re in a fight on price. They’re in a fight on output.”
The United States could look to encourage the Saudis to return to their previous lower production levels.
However, the Saudis are showing no signs of easing off the taps. The kingdom announced last week it plans to boost oil production capacity for the first time in a decade, raising it to 13 million barrels per day from 12 million barrels per day.
Analysts say Russia may have less reason to defuse tensions, after finally breaking over losing market share to U.S. shale producers.
But Trump has an opportunity to leverage his relationships with Russian President Vladimir Putin and Saudi Arabia Crown Prince Mohammed bin Salman to strike a deal to end the oil price war, something his allies are hoping for.
“Diplomatic engagement with the Saudis and other OPEC nations should be at the very top of the list [for Trump],” Louisiana Republican Rep. Garret Graves told the Washington Examiner.
Other Republicans have urged Trump to halt imports of oil from the two countries, while Alaska Sen. Dan Sullivan led a call Wednesday with several GOP colleagues and the Saudi ambassador to the U.S. to discuss the oil markets.
