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U.S. oil prices jumped 10% to clinch above $22 per barrel on Thursday after President Donald Trump said the oil price tag war between Russia and Saudi Arabia may come to its end soon.
After closing the first quarter of 2020 on the worst fall, U.S. oil prices have shown signs of recovering amid the coronavirus crisis. This is after the United States President Donald Trump said that he expects Russia and Saudi Arabia to come to a common agreement on their differences.
Saudi Arabia, an OPEC member, has been pushing the Russians, which is not an OPEC member, to cut daily oil production in order to stabilize the price. However, since the Russians are independent, they opted not to comply with the request. Instead, the Russians raised their daily oil production with over a million BPD.
As a result, the Saudi decided to escalate the cold war by further pumping their oil into the market. In addition, they announced a further discount on their crude oil to have a cutting edge in the already flooded market.
Global and U.S. Oil Industry Surrenders to Coronavirus
As we enter the second quarter, most businesses have either closed down or are preparing to do so after the coronavirus crisis has brought down the demand, and governments continue putting strict measures to control the spread of the virus. In the United States, the number has been rising at an alarming rate, which has called for the need to go a mile further and maybe put the whole country into lockdown.
According to Bill Gates, the country has been left with no other option if it wants to see the rate of infection and deaths come down. He recommends a lockdown of 10 weeks minimum for the spread of the coronavirus to be controlled.
If the lockdown is initiated, the oil demand is going to tumble further to a point never witnessed in recent times. As of April 1, the Center for Disease Control and Prevention had reported total cases of over 186,101 and fatalities tallying to 3,603. Being the leading country with the highest number of coronavirus cases, the stock market and the oil industry will shed further at an unprecedented rate.
On other oil markets, the WTI crude rose by 23.58% to clinch above $25.10 per barrel, while the European Brent crude jumped by 20.33% to hit $29.77 per barrel.