Saudi Arabia said on Tuesday it is monitoring oil markets and is ready to take extra measures to stabilize them along with OPEC+ allies and other oil producers, Reuters reports, citing an SPA report and Saudi Cabinet statement.
The announcement comes as turmoil in global oil markets continues even after an agreement by OPEC+ countries to slash oil production. The benchmark price for crude oil in the United States fell to negative $37.63.
“The kingdom is keen on achieving oil market stability and is committed with Russia to implement production cuts over the next couple of years,” the Saudi cabinet statement said.
The historic fall in U.S. oil prices below $0 for the first time ever comes as demand for oil has evaporated with a stalled economy and millions worldwide sheltered-in-place. That has led to a worldwide oil glut, with tankers filled to the brim with oil and storage now mostly unavailable.
President Trump says he is weighing options to help the U.S. oil industry, starting with filling the U.S. strategic petroleum reserve, and noted that he will look at potentially preventing Saudi and other foreign oil tankers from docking on U.S. shores, he said in a press conference on Monday.
“The broader takeaway is that the Covid-19 crisis is an extraordinary deflationary shock to the economy, causing the idling of a vast share of the world’s productive resources,” Neil Irwin in the New York Times writes, cautioning that the fall in U.S. crude now is the beginning of a “deflationary moment.”
“Don’t let shortages of a few goods, like face masks or toilet paper, confuse the matter. The consequences will almost surely persist beyond the period of widespread lockdowns.”
