Saudi Arabia and Russia are “very, very close” to a deal on oil production cuts, Kirill Dmitriev, the CEO of Russia’s sovereign wealth fund Russian Direct Investment Fund (RDIF), said on Monday morning. He hinted that the deal will also include production cuts from the United States. The two oil titans were expected to have a meeting today, but CNBC and CNN report that the meeting will now take place on Thursday via videoconference. Attendees of the upcoming meeting have not been announced, but representatives from the U.S., UK, Canada, Mexico, and possibly some other oil-producing countries are likely to be in attendance. The delay sent oil markets lower on Monday.
U.S. WTI futures were down 1.48 percent as of 2:03 p.m. HK/SIN, to $27.92 per barrel. Brent crude futures dipped down 0.64 percent to $33.89 per barrel. The declines came after surges in oil prices last week after U.S. President Donald Trump announced his intention to help broker a deal between Russia and Saudi Arabia. On Thursday alone, U.S. oil prices jumped 25 percent after Trump announced his expectations that production will be cut by 10 to 15 million barrels per day. Crude prices have been subject to extreme volatility since early March when Saudi Arabia announced its intention to start a price war by lower prices and increasing production after Russia declined to extend the production cuts in place since early 2019. Before last week’s rally, crude prices recently hit 18-year lows, pummeling American oil companies and energy stocks, and prompting Trump to intervene despite his prior preference for low oil prices as these low prices could result in multiple bankruptcies for oil conglomerates in the U.S.
Still, despite optimism about a potential deal later this week, nearly a third of analysts polled by CNBC expect crude oil prices to fall below $20 per barrel in Q2 2020, with some expecting prices as low as $10 per barrel due to decreased demand following coronavirus shutdowns. The economic impacts of the virus have yet to be determined in full, and though Trump has expressed optimism that the shutdowns will end in the near future, health officials remain skeptical that the worst of the pandemic has passed.