The Trump administration is considering a host of potential resolutions to the oil price war currently wreaking havoc on global markets, including luring Saudi Arabia away from the Organization of the Petroleum Exporting Countries (OPEC) and into an alliance with the United States, according to U.S. Energy Secretary Dan Brouillette.
“There are many, many ideas that are floated around the policy space. That is one of them,” Brouillette told Bloomberg Television on Monday. “I don’t know that that’s going to be presented in any formal way.
“As part of the public policy process, if you will, our inter-agency partners often get together and talk about a number of different items. But we’ve made no decisions on this. I’ll work closely with Secretary of State Pompeo and others. At some point we’ll engage in a diplomatic effort, if you will, down the road. But no decisions have been made on anything of that nature.”
With the OPEC-plus alliance having failed to reach an agreement earlier this month to extend production cuts and boost prices, the Saudi-led cartel and former oil ally Russia are entrenched in a battle to see which one can hold out longer in an oversupplied global market, Fitch Solutions Inc. analysts said Thursday. The analysts see the kingdom revising its strategy within 24 months and returning to its traditional role as a global market manager, curtailing supply as needed in order to boost prices.
However, 24 months might as well be a lifetime for already struggling North American producers, which are already reporting furloughs and capital spending cuts.
U.S. production is forecast to “bear the largest impacts” through 2021 from the price war and economic impacts of the coronavirus pandemic, IHS Markit researchers said Monday. U.S. oil output alone is forecast to crater by 2-4 million b/d over the next 18 months.
At least one Senate Republican believes the United States should embargo oil from both Russia and OPEC nations in response to their efforts “to distort energy markets.” Nine others, led by Lisa Murkowski (R-AK) and Dan Sullivan (R-AK), have called on Secretary of Commerce Wilbur Ross to investigate “excessive dumping of crude oil” by Russia and Saudi Arabia.
“We are deeply concerned about the inevitable loss of American jobs and investment in our nation’s energy infrastructure as a result of this price war,” the lawmakers said in a March 20 letter to Ross.