The United States and Saudi Arabia have been discussing the idea of setting up an oil accord, Bloomberg reports, pointing out Energy Secretary Dan Brouillette. Such an arrangement would efficiently amount to a cartel, which, by meaning, is a group of independent market participants consenting to act together to affect the marketplace in such a way favorable to them.
For now, however, this is just an idea that some officials in the Trump administration assistance. The chance of it becoming anything more is unclear, according to Brouillette.
” There are lots of, lots of ideas that are drifted around the policy area, that is one of them,” the U.S. Energy Secretary told Bloomberg in an interview. ” I don’t know that it is going to exist in any formal way.”
The U.S. oil industry has actually suffered a heavy blow from the mix of the coronavirus outbreak and the cost war that Saudi Arabia started after Russia refused to comply on much deeper production cuts. Producers are slashing budget, suspending share buybacks, and some have already asked oilfield company for significant discount rates to their services.
West Texas Intermediate, the U.S. benchmark, has shed about 60 percent of its value since the start of the year
According to Reuters’ John Kemp, it has even more to fall unless the economic outlook for the country– and the world– enhances dramatically and rapidly. This outlook is not good news for either the shale market or the supermajors in the U.S., which makes the administration’s relocations worrying Saudi Arabia only logical. Absolutely nothing is certain.
” As part of the public policy procedure, if you will, our interagency partners often get together and talk about a variety of various items, however we’ve made no choice on this,” Brouillette informed Bloomberg. “At some time we will take part in a diplomatic effort down the roadway. No decisions have made on anything of that nature.”
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