Trump says he would use fares if necessary to protect the oil industry

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(Bloomberg) – President Donald Trump has stepped up threats to use tariffs to protect the US energy industry from a historic glut of oil, as efforts to strike a global deal to cut output appear to be losing momentum momentum.

Trump said at a White House media briefing on Saturday that he would use fares if necessary to protect the national oil industry, even though he predicted that Saudi Arabia and Russia would reach an agreement to reduce production and stem the price rout.

But such an agreement seemed a little more distant this weekend after a diplomatic dispute between Saudi Arabia and Russia. A rally of OPEC + members and other producers scheduled for Monday has been postponed, to allow more time for negotiations.

Saudi Arabia, which launched a price war last month with Russia after the breakdown of OPEC + talks, has made it clear that it will not cut production unless other producers – including the United States – States – also do not restrict their offer. But Trump said on Saturday, “I don’t care about OPEC,” a “cartel” that he opposed all his life.

The prospect of an agreement to reduce the massive oil glut caused by the coronavirus foreclosure boosted benchmark oil futures last week. Oil prices have dropped about 50% this year, as the pandemic has driven up to a third of global demand for oil.

In the latest maneuver in the price war, Saudi Arabia postponed its monthly pricing event for exported oil on Sunday. Saudi Aramco’s official selling prices for May may be pushed back to Tuesday or Thursday, according to someone familiar with the situation. The OPEC meeting has been tentatively postponed to Thursday.

The move gives the company a better idea of ​​how the negotiations are going before setting the prices that are its key weapon in its market share war with Russia. Last month, it also postponed the event in the midst of a quarrel at OPEC + and responded to the breakdown of these talks with a historic drop in prices.

With the idea of ​​cutting tariffs on foreign oil, the US oil industry is divided. Some independent shale producers – who have been hardest hit by the recent market slump – are in favor, while refiners and large integrated companies are generally opposed.

The American Petroleum Institute, which helped organize a meeting with the president on Friday, says the tariffs would cause uncertainty in an already turbulent global market.

“If I have to make tariffs on oil from outside, or if I have to do something to protect thousands and tens of thousands of energy workers, and our big companies that produce all these jobs, I will do whatever I need to do, “said Trump on Saturday. Low oil prices “will hurt a lot of jobs,” he said.

It was a change in tone from Friday when he suggested he was not inclined to target Russia or Saudi Arabia with oil prices.

Hundreds of thousands of jobs in the US oil industry are on hold, with about $ 15 billion in investments being wiped out of shale explorers’ budgets and many of them on the verge of bankruptcy.

(Addition of the Saudi decision to delay the pricing event from the sixth paragraph.)

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