Trump touts 'great' Saudi-Russia oil deal to halt price rout, but details unclear

DUBAI/MOSCOW/WASHINGTON (Reuters) – U.S President Donald Trump said on Thursday he had brokered a deal with top crude producers Russia and Saudi Arabia to cut output and arrest an oil price rout amid the global coronavirus pandemic, though details of how cuts would work were unclear.

Trump said the two nations could cut output by 10 to 15 million barrels per day (bpd) – an unprecedented amount representing 10% to 15% of global supply, and one that would require the participation of nations outside of OPEC and its allies.

A senior U.S. administration official familiar with the matter said Trump would not formally ask U.S. oil companies to contribute to the production cuts, a move forbidden by U.S. antitrust legislation.

Russia and Saudi Arabia have been at odds since early March, when they failed to agree on a deal curbing output as the coronavirus spread around the globe. The pandemic has worsened since, freezing economic activity and sending oil prices into a tailspin as producers confronted the prospect of a dramatic fall in demand along with a flood of unwanted oil supply.

Saudi Arabia, the de facto head of OPEC, called on Thursday for an emergency meeting of OPEC and non-OPEC oil producers, an informal grouping known as OPEC+, state media reported, saying it aimed to reach a fair agreement to stabilize oil markets. Trump is separately set to meet with U.S. oil industry executives on Friday.

Trump said he spoke with both Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman on Thursday. “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 wrote on Twitter.

“Trump’s call to Putin has changed everything,” one OPEC+ source said, adding that initial talk among the group was about how other large producers such as Canada and Brazil would need to join in any coordinated output cuts.

Jason Kenney, the premier of Alberta, Canada’s primary oil-producing province, said Thursday that Alberta was open to joining a production-cut deal, though he said, “It’s the Saudis and the Russians here who are the problem.” Canada produces roughly 4 million barrels of oil every day.

Global oil demand is expected to fall by about 30 million bpd in April, or about one-third of daily consumption. Some 3 billion people around the world have been put on lockdown to slow the spread of coronavirus, which has sickened 1 million people worldwide and killed nearly 50,000.

The immense decline in demand sent oil prices to their lowest levels since 2002, close to $20 per barrel, hitting budgets of oil-producing nations and dealing a huge blow to the U.S. shale oil industry, which cannot compete at low prices.

The downward pressure has been exacerbated by the battle for market share between Russia and Saudi Arabia. Russia rejected the Saudi proposal to take supply off the market in part because it has cut its own output for years while U.S. production grew to a record 13 million bpd, gobbling up market share.

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Russian Energy Minister Alexander Novak said on Thursday that Moscow was no longer planning to raise output and was ready to cooperate with the Organization of the Petroleum Exporting Countries and other producers to stabilize the market.

It was not clear when Saudi Arabia’s proposed emergency OPEC meeting could be held.

A meeting could represent a thaw in Saudi-Russia tensions. A senior Gulf source familiar with Saudi thinking told Reuters that Russia’s opposition to its proposal to deepen output cuts was the cause of market turmoil.

At the time of the deal’s collapse, OPEC and its allies were collectively cutting output by about 1.7 million bpd – making a 10-to-15 million-bpd cut a big hurdle unless it brought in other major worldwide producers.

The swift and aggressive Saudi response to the collapse of the OPEC+ deal shocked the oil industry. The kingdom slashed export prices, opened the taps to pump at maximum production and tried to sell cheaper oil to refiners that buy Russian crude.

OUTPUT CUTS

Major global oil producers including Chevron Corp (CVX.N), Brazil’s Petrobras and Britain’s BP Plc (BP.L) have already scaled back production estimates as fuel demand has dropped precipitously and storage is rapidly filling. Storage is expected to be full by May, analysts said, which would force oil producers to cut output anyway.

“I don’t think this does anything in the near term. Our pipelines have told us they don’t have room for our barrels,” said Bob Watson, chief executive of U.S. shale producer Abraxas Petroleum, based in San Antonio, Texas.

The free-fall in prices has spurred regulators in the U.S. state of Texas, the heart of the country’s oil production, to consider regulating output for the first time in nearly 50 years, while producers in neighboring Oklahoma asked state regulators also to consider cuts Thursday.

Ryan Sitton, one of three elected oil-and-gas regulators in Texas, tweeted on Thursday that he had spoken with Russia’s Novak about a cut of 10 million bpd in global supply.

“While we normally compete, we agreed that #COVID19 requires unprecedented level of int’l cooperation,” Sitton wrote.

Brent oil prices rose 21% to $29.94 per barrel, having earlier risen to as high as $36.29. U.S. benchmark WTI crude settled up 25% to $25.32 a barrel.

Even with Thursday’s surge, Brent is still less than half its $66 closing level at the end of 2019.

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Missiles intercepted above Saudi capital and city of Jazan -state media

RIYADH (Reuters) – Ballistic missiles were intercepted on Saturday in the sky above Saudi Arabia’s capital Riyadh and the southern city of Jazan, state media reported, citing its own sources and the Saudi-led coalition fighting in Yemen.

Residents in Riyadh reported multiple blasts around 2320 (2020 GMT), followed by emergency vehicle sirens in some northern districts.

The source of the projectiles was unclear and there was no immediate claim of responsibility.

Yemen’s Iran-aligned Houthis battling the Saudi-led coalition have launched hundreds of missiles and drones across the border, mostly at nearby military and civilian targets but also at Riyadh. The last attempted strike on the capital was in June 2018.

Saudi Arabia blamed Iran for a September 2019 drone and missile attack on two oil installations that initially halved Saudi oil output, even after the Houthis claimed responsibility. Tehran denies involvement.

The Saudi-led coalition intervened in Yemen’s civil war in 2015 to try to restore the internationally-recognized government of President Abd-Rabbu Mansour Hadi, ousted by the Houthis in 2014. Tens of thousands of people have died in the conflict that is widely seen as a proxy war between Saudi Arabia and Iran.

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Saudis tighten anti-virus curfew, UAE closures leave travellers stranded

RIYADH/DUBAI (Reuters) – Saudi Arabia reported its second coronavirus death and tightened a nationwide curfew on Wednesday, barring entry to and exit from the capital Riyadh and the holy cities of Mecca and Medina as well as movement between all provinces.

The orders, approved by King Salman and published by state media, also brought forward the start of curfew in the three cities to 3 p.m. from 7 p.m., starting on Thursday.

Saudi Arabia introduced the curfew on Monday, initially for 21 days, after registering a jump in infections. Its second fatality was a 46-year-old foreign resident of Mecca, among 133 new cases that took Saudi Arabia’s total to 900.

Across the six-nation Gulf Cooperation Council, the tally rose to 2,472 with seven deaths, as the United Arab Emirates registered 85 new infections, Oman 15 and Kuwait four.

Saudi Arabia has also halted international flights as well as suspending visas for the year-round Umrah pilgrimage and closing mosques, schools, malls and restaurants.

The restrictions have altered the rhythm of daily life in the country of some 30 million, where late-night gatherings at coffee shops or private homes are common.

Turkish resident Nasif Erisik, who plays cards most nights with friends at one of their homes, said the group had resorted to online gaming to keep in touch: “Corona has … changed our habits and everything in our lives.”

The authorities say they will fine or jail those who violate restrictions. The Interior Ministry on Wednesday reported high compliance.

QUARANTINE BREACHED

But in the UAE, the region’s tourism, business and transit hub, 64 people were facing legal action for not obeying a 14-day home quarantine order after coming into contact with people confirmed to be infected, the government tweeted.

Hundreds of Europeans were stranded in the UAE after Dubai and Abu Dhabi airports stopped flights on Tuesday night with little warning.

Oil engineer Jamie Richardson had been due to return to Britain on Wednesday for a new job. “It’s proper stressful,” he said. “You have no idea what’s going on.”

UAE authorities have urged people to stay home but not announced an official curfew or suspended work.

On Wednesday the business regulator in Dubai, one of the member-emirates, told private companies to implement remote working for 80% of staff through April 9.

Pharmacies, grocery stores, supermarkets and cooperative societies were exempted. It later clarified that other sectors, including banking, industrial and manufacturing, construction, logistics and delivery were also exempt.

Food shops were told to stay open 24 hours a day but not exceed 30% customer capacity, to be able to maintain a 2-metre (6-foot) distance between shoppers.

Organisers of the Expo 2020 Dubai world fair, scheduled to start in October and expected to draw 11 million overseas visitors, confirmed one coronavirus case among staff and said they were reviewing their preparations.

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Saudi Arabia imposes curfew to curb coronavirus, UAE halts passenger flights

DUBAI (Reuters) – Saudi Arabia will impose a nationwide curfew starting on Monday after reporting a jump of almost a quarter in coronavirus cases, while the United Arab Emirates will suspend all passenger flights as of Wednesday, state media reported.

Saudi King Salman ordered a curfew from 7pm to 6am for 21 days to slow the spread of the virus, state media said. Anyone breaking the curfew will be fined 10,000 riyals ($2,665) and repeat offenders could be sent to jail for up to 20 days, state TV said.

Saudi Interior Ministry spokesman Colonel Talal Mashhoud told a news conference, during which 51 new infections were announced, that security forces would enforce the curfew and that if needed “military authorities may be called upon”.

The six-nation Gulf Cooperation Council has recorded more than 1,800 infections and four deaths from the virus. Saudi Arabia has the most confirmed cases with 562.

The UAE, a major air transit center, said it will halt all passenger and transit flights to and from the country for two weeks, state news agency WAM said. Cargo operations continue.

The country reported 45 new cases among Western, Arab and Asian nationalities, taking its total to 198.

State-owned Emirates, one of the world’s biggest long-haul airlines, earlier said it would stop passenger operations this week, except for repatriation flights to several countries.

The UAE will close malls starting on Wednesday, leaving open pharmacies, supermarkets and wholesale produce providers, WAM reported, adding that delivery services are exempt. Dubai said it would shut food establishments from Monday.

The UAE urged people to stay home but has yet to announce a suspension of work in the public and private sectors. The central bank, other ministries and government departments said they are asking staff to work remotely.

The region has expanded measures to combat the spread of the disease. Kuwait and Saudi Arabia were the first to take drastic steps including halting international flights, suspending work at most institutions and closing public venues.

Saudi Commerce Ministry spokesman Abdulrahman al-Hussein told the news conference that pharmacies, supermarkets and restaurants would offer delivery services during the curfew.

Kuwait said on Monday it would issue expatriate teachers exit permits. State news agency KUNA later said EgyptAir would operate a daily flight to Cairo for a week starting on Wednesday for Egyptian residents who wish to leave.

Qatar’s health ministry called for volunteers to staff medical facilities to “ease the strain on resources” in the tiny country which has 494 cases, mostly among migrant workers.

In the UAE, where expatriates also make up most of the population, Abu Dhabi’s Crown Prince Mohammed bin Zayed al-Nahyan suspended rent evictions for two months, state media said.

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