Oil prices rebound after hopes of a price war truce between Saudi Arabia and Russia

The oil industry has seen the biggest one-day price surge on record this week. Global oil prices have gone up by more than 20% after indications that Saudi Arabia and Russia could end their price war.

In March the cost of Brent Crude fell to $22.58 a barrel, the lowest level seen since November 2002. A deal between Saudi Arabia and Russia to cut production after a drop in demand caused by the global Coronavirus pandemic collapsed last month. In response both countries increased production and slashed prices as they wrestled for control of the market. These actions coupled with the wider drop in global demand because of the pandemic had a dramatic impact on the energy supply industry world wide.

 

In the US it was the worst performing quarter on record for the oil industry, as prices fell by two thirds in the first three months of the year. This has caused Washington to try and broker a new deal between Saudi Arabia and Russia to put an end to their feud in hopes of recovering global prices. This week the US President, Donald Trump, tweeted “I expect and hope” that both sides will cut supply by “approximately 10 million Barrels”. The Russian Energy Minister, Alexander Novak, has said Moscow may re-enter talks with Saudi Arabia, and would work to help stabilise the oil market.

Even though there’s been no confirmation of whether a truce will be reached, the oil industry is welcoming the news.

So what does this mean for the UK?

At the moment no one really knows what will happen over the next few months, as we all adjust to a very different life because of the Covid-19 outbreak. The global pandemic means all the old ways of thinking have to be thrown out the window as experts struggle to predict exactly what might happen.

Donald Trump’s tweet raises a number of questions about how much output might need to be cut to help stabilise the market. The US President’s suggestion that Saudi Arabia and Russia would reduce production by about 10 million barrels, which would amount to about 10% of the world’s output. But analysts are suggesting that it might not be enough to offset the reduce in demand caused by the Coronavirus pandemic.

Here at Clifford Talbot Partnership, we are drawing on more than 36 years of experience riding the waves of a constantly changing and challenging industry to steer us through the next few months. We are confident in our ability to adapt to this new environment and will continue to do everything we can to help our clients through this. If you don’t already use a utility management company like CTP please check out our Utility Bureau Service which is exactly what companies need right now to help them navigate this unusual situation. Any new enquiries please get in touch with our owner Steve Clifford on 07929 345764 who is on hand to answer any questions. Current clients please get in touch with your Account Manager directly or contact us here.

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Steve Clifford is Owner of Clifford Talbot Partnership which was formed in 1984 to provide solutions to energy and utility management issues in commerce, industry, government and the public sectors throughout the UK.