(Bloomberg) – President Donald Trump raised the threat of using tariffs to protect the US energy industry from a historic oil, as efforts to create a global business to reduce production appeared to be losing momentum.
Trump said Saturday at a White House press conference that he would use tariffs if needed to protect the domestic oil industry, even though he predicted that Saudi Arabia and Russia would agree to cut production and hamper price developments.
But such a deal looked a little further from the reach this weekend after a diplomatic row between Saudi Arabia and Russia. A gathering of OPEC + members and other producers scheduled on Monday was pushed back to allow more time for negotiations.
Saudi Arabia, which started a price war last month with Russia after the OPEC + call collapsed, has made it clear that it will not cut production unless other producers ̵
The prospects of a deal to reduce the massive oil spill caused by the coronavirus lock sent benchmark oil futures to a record gain last week. Oil prices have fallen about 50% this year as the pandemic has knocked out as much as a third of global oil demand. This means that producers will eventually have to reduce production – with or without a deal – as storage is landed both on land and at sea.
In the latest maneuver in the price war, Saudi Arabia on Sunday postponed its monthly pricing event for exported oil. Saudi Aramco’s official sale prices for May could be postponed to Tuesday or Thursday, according to a person familiar with the situation. The OPEC meeting is scheduled to be reversed for Thursday.
The move will allow the company to get a better idea of how the negotiations are going before setting prices that are its key weapons in their war with Russia for market shares. Last month, it also postponed the event in the midst of an argument at OPEC + and responded to the breakdown of these talks with a historic price cut.
When it comes to the idea of easing duties on foreign oil, the US oil industry is divided. Some independent shale producers – who have been hit hardest by the recent market downturn – support, while refineries and large integrated companies usually oppose.
The American Petroleum Institute, which helped arrange a meeting with the president on Friday, claims that tariffs would lead to uncertainty in an already-laughed global marketplace.
“If I have to make tariffs on oil that comes from outside, or if I have to do something to protect thousands and tens of thousands of energy workers, and our amazing companies that produce all these jobs, I will do what I need to do,” Trump said Saturday. Low oil prices “will hurt many jobs,” he said.
It was a change in tone from Friday, when he suggested he was not inclined to target Russia or Saudi Arabia with oil tariffs.
Hundreds of thousands of US jobs in the oil industry are in the balance, with about $ 15 billion of investment wiped from the budget for shale researchers and many of them on the brink of bankruptcy.
(Adds Saudi’s decision to delay the pricing event from the sixth paragraph.)
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