US, Russia plot ways to prop up oil prices

Call between Trump and Putin sets up efforts to stabilize global energy market

Russian President Vladimir Putin and his US counterpart Donald Trump reached an agreement in a phone call on Monday to have their top energy officials discuss ways to shore up the battered oil market.

"The two leaders exchanged opinions on the current state of the global oil market, and an arrangement was made on Russian-US consultations in this regard through energy department heads," the Kremlin said in a statement.

White House spokesman Judd Deere said in a statement that Trump and Putin had "agreed to work closely together through the G20", and they both agreed on the "importance of stability in global energy markets".

US Energy Department spokeswoman Shaylyn Hynes said on Tuesday that US Energy Secretary Dan Brouillette will talk with Russian Energy Minister Alexander Novak about "ways the world's largest producers can address volatility in the global oil markets during this unprecedented period of turmoil".

The agreement arising from the phone call between Trump and Putin marks a fresh drive to prop up the global oil market in the wake of a failed attempt last month for cooperation between the Organization of the Petroleum Exporting Countries and Russia on curbing oil production.

The standoff between Russia and the producers cartel has sent shock waves through the energy market, especially as the failure to reach a deal came as global demand for oil was being further battered by the raging coronavirus pandemic.

Oil prices fell again on Monday, with US crude futures dropping below $20 a barrel and the price for Brent crude, the international benchmark, slumped to 18-year lows.

The historic lows also threaten the higher-cost drillers in the US shale oil industry.

Largest oil, gas producer

The United States has grown in recent years into the world's largest oil and gas producer, thanks to a technology-driven shale drilling boom. But the current price of oil is below the production cost of many US drillers.

In an interview with Fox News before the phone call with Putin, Trump said Saudi Arabia and Russia "both went crazy" in the oil price war.

"We don't want to have a dead industry that's wiped out," Trump said in the interview. "It's bad for them, bad for everybody. This is a fight between Saudi Arabia and Russia having to do with how many barrels to let out. And they both went crazy, they both went crazy."

Oil industry leaders, trade groups and some Republican senators have pressed the Trump administration to push for a diplomatic solution to the plunge in oil prices.

The Reuters news agency reported that the Trump administration is seeking to persuade the world's top exporter and OPEC's de facto leader, Saudi Arabia, to cut crude output, and will soon send a special energy envoy, Victoria Coates, to the kingdom.

Before the call, Trump said that, in addition to oil and the pandemic, he and Putin would discuss trade matters and the sanctions the US has imposed on Russia. A statement from the White House after the leaders' conversation made no mention of those issues.

The US has imposed sanctions on two units of Russia's largest oil producer Rosneft in Venezuela after accusing the company of providing a financial lifeline to Venezuelan President Nicolas Maduro.

Late last year, the US slapped sanctions on Russia's Nord Stream 2 natural gas pipeline, halting work on the project weeks before it was due to be completed. Washington's move could allow for increased competition in the gas markets of Europe. The US is eager to export liquefied natural gas to the continent.

Trump said in the Fox News interview before the call that Putin had been raising the issue of the sanctions over the past two years, and that he had expected it to come up in their conversation.

However, Kremlin spokesman Dmitry Peskov denied Trump's claim that Putin had made such requests.