Saudi Arabia, ignoring calls from the Donald Trump administration for a respite, is blasting the world with cheap oil in a high-stakes gamble to force rival Russia from the market.

Crude oil is now hovering around US$22 per barrel after dropping as low as $19.52 on March 30. And it risks plunging further, into the single digits.

State oil titan Saudi Aramco bragged in a Tweet this week that it had filled 15 new tankers with 18.8 million barrels of crude. “Reliability is not just a performance indicator, but rather a culture of sustainability in supplying the world with energy.”

“That’s energy; that’s Aramco,” the company said.

ATF

The Aramco statement came after Trump offered to mediate between Saudi Arabia and Russia in their month-0ld price war.

“I have confidence in both that they’ll be able to work it out,” the US leader said after a Tuesday call with Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman.

Trump has previously labeled the price collapse in positive terms as a “tax break” for the American consumer.

US Secretary of State Mike Pompeo has been more focused on the downsides, urging Saudi Crown Prince Mohammed bin Salman last week to end the price war.

Calling Russia
After getting rebuffed by longstanding ally Saudi Arabia, the Trump administration appears to be looking to Russia for intervention.

US Secretary of Energy Dan Brouillette on Tuesday called Russian Energy Minister Alexander Novak, following up on Trump’s March 30 phone call with his counterpart Vladimir Putin.

“Secretary Brouillette and Minister Novak discussed energy market developments and agreed to continue dialogue among major energy producers and consumers, including through the G20, to address this unprecedented period of disruption in the world economy,” Russia’s TASS agency reported, quoting the US Department of Energy.

US oilfield activity “will collapse” should prices remain where they are, investment firm Raymond James warned last week.

The price war was sparked on March 6, when former OPEC+ partners Saudi Arabia and Russia failed to reach an agreement on production caps.

While the Saudis wanted to see production cuts deepened to compensate for a drop in Chinese demand and to fund their budget, the Russians wanted to keep the caps as they were to compete with US shale.

The Saudis then decided to embark on a game of chicken, flooding the market with oil and offering steep discounts to buyers, in an apparent bid to force the Russians to return to the table. But the Russians also dug in, sending prices into a nosedive.

The flood of oil arrived in parallel with a global collapse in demand caused by the coronavirus pandemic.

Fears over Covid-19 transmission have grounded major airlines like Emirates, brought cruise lines to a halt and shuttered businesses around the world, as billions of people – from India to California – heed calls to “stay home.”

Trump is set to meet with US oil executives on Friday, according to the Wall Street Journal, to discuss support for the beleaguered industry.