Photographer: Angus Mordant / Reuters
U.S. oil industry regulators opened a dialogue with OPEC in talks that could help foster a truce between the world’s three largest oil producers and potentially resolve a Saudi-Russian price war.
U.S. antitrust laws prevent a formal deal and there is no suggestion the two sides would coordinate on production decisions. But the Texas regulator is considering curtailing output in America’s largest oil-producing state for the first time in decades.
Separately, the U.S. is considering other avenues to alleviate the pressure on American oil producers. The Trump administration is considering a diplomatic push to get the Saudis to cut oil production in tandem with threats of sanctions on Russia.
Saudi Arabia won’t be able to keep up its price war for too long. The kingdom has been forced to cut its budget but needs benchmark oil prices over $60 a barrel to balance it.
In Russia, oil companies are also struggling with lower crude prices. Many producers there could begin hemorrhaging cash if prices remain below $30 a barrel.
Source: The Wall Street Journal