Oil prices soared Thursday after President Trump said he expects Saudi Arabia and Russia will make huge cuts to their oil production in order to calm the market.
The U.S. benchmark surged by 24.67 percent to $25.32 – the biggest gain since record-keeping began in March of 1983 as tracked by the Dow Jones Market Data Group.
Brent, the global benchmark, saw the same action rising 21.02 percent to $29.94 per barrel.
CORONAVIRUS PANDEMIC ZAPS OIL DEMAND
“I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!” Trump tweeted in regard to Saudi Arabia and Russia.
Following Trump's announcement, Saudi Arabia called on OPEC members, their allies and other countries to hold an urgent meeting "with aim of reaching a fair agreement to restore the desired balance of oil markets."
Oil prices crashed to an 18-year low last month after an oil-price war broke out between Saudi Arabia and Russia when the latter refused to join OPEC in deepening production cuts. Saudi Arabia responded by boosting its output to avoid losing market share, resulting in a gush of supply hitting a market that was already experiencing a glut.
To make matters worse, the oil market has seen significant demand destruction as the COVID-19 pandemic curbed the need for gasoline and jet fuel.
While oil traders see Trump's announcement as a sign of good things to come, Damien Courvalin, head of energy research and senior commodity strategist at Goldman Sachs, thinks it's too late for coordinated policy action to help inland markets.
"Coordinated supply cuts would only limit the downside if it precipitated the shut-in of production, yet such an agreement would take time with inland shut-ins already appearing to be required locally," he wrote in a note to clients on March 31.