WASHINGTON — When oil prices crashed in early March after a dispute between Russia and Saudi Arabia, President Trump put a positive spin on the news. “Good for the consumer, gasoline prices coming down!” he wrote on Twitter as markets tumbled. On Tuesday, Mr. Trump said that falling gasoline prices amounted to “the greatest tax cut we’ve ever given.”
But the president has also nervously eyed the dire threat that American energy producers face from rock-bottom oil prices, and American officials have spent weeks pressing Saudi Arabia and Russia to settle a dispute that has created a global oil glut and further shaken an already-traumatized global economy.
Leaning on two authoritarian leaders he has befriended as president, Mr. Trump spoke this week with President Vladimir V. Putin of Russia and the Saudi crown prince, Mohammed bin Salman, urging them to bolster prices by cutting their domestic oil production.
In two tweets on Thursday, Mr. Trump said that he expected they would jointly cut output by as much as 15 million barrels in a move that he said would “be GREAT for the oil & gas industry!”
Prices for Brent crude initially leapt by nearly 50 percent after Mr. Trump’s tweets, but dipped again as it became unclear whether his supposed breakthrough would materialize.
Neither Russia nor Saudi Arabia publicly committed to such a cut, and a Saudi statement issued on Thursday called only for a meeting of oil producing nations to reach a “fair agreement.” The Kremlin cast further doubt on the possibility, denying a claim that Mr. Trump made on Twitter that Mr. Putin had discussed the matter with the crown prince.
The picture emerged of a president eager to find some good economic news amid the pain of a largely shuttered domestic economy, and of an embattled Saudi leadership feeling financial strain of its own, perhaps seeking the favor of Mr. Trump. Analysts said the major outstanding question was how Moscow, which has been waging a price war with Riyadh, will respond.
Executives from Exxon Mobil, Chevron, Occidental, Devon, Phillips 66, Energy Transfer and Continental Resources are scheduled to meet on Friday with Mr. Trump at the White House, according to two industry insiders familiar with the plans.
Deal or no, Mr. Trump’s unusual oil diplomacy and his eagerness to claim a victory reflects his growing anxiety about the United States’ coronavirus-gripped economy. It also underscores his sudden reliance, after years of happy talk about growing American energy independence, on foreign oil industries. But if Mr. Putin and Prince Mohammed fail to strike an agreement that bolsters global oil prices, Mr. Trump will find himself left twisting in the wind by two repressive leaders whose good will he has spent years cultivating at significant political cost.
Writing Thursday on Twitter, Mr. Trump said he had spoken that morning to Prince Mohammed, who told him he had been in touch with Mr. Putin, adding: “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!” In a subsequent tweet, Mr. Trump said the production cut could be five million barrels per day larger.
American oil executives immediately reacted positively to the tweet. “I’m totally surprised and I’m glad the president took charge,” said Scott Sheffield, the chief executive of Pioneer Natural Resources, a major Texas oil company, who has urged the Trump administration to put pressure on Saudi Arabia and Russia.
But the Kremlin quickly played down Mr. Trump’s statement. Dmitri S. Peskov, a spokesman for Mr. Putin, told the Interfax news agency that the Russian president had not spoken with the Saudi crown prince. “No, there was no conversation,” he said.
Tass, a Russian state news agency, carried a more pointed exchange in which the Kremlin spokesman declined to say whether Mr. Trump might be manipulating markets. Asked if Mr. Trump had “intentionally mistaken” news about a phone call, Mr. Peskov said, “It’s difficult for me to answer.”
Oil prices have been hammered in recent weeks as the coronavirus pandemic has all but eliminated travel and dampened demand for energy. The price war that broke out between Saudi Arabia and Russia last month intensified the decline.
After failing to reach a deal on production cuts in March, Saudi Arabia and Russia began pumping huge amounts of oil, adding to a world glut. One aim has been to gain market share from American producers that have been increasing output and exports in recent years. But as Saudi Arabia has been shipping new production, it has been having trouble finding buyers.
The combination of slumping demand and the contest between two of the world’s largest oil producers had pushed crude oil prices down by 55 percent in March alone, wreaking havoc on the energy industry, with oil companies slashing budgets and refineries cutting production of gasoline, diesel and jet fuel.
Mr. Trump made clear his anxiety on Wednesday during a news briefing at the White House. After saying the 17-year low in oil prices was “incredible, in a lot of ways,” he went on to express alarm about the fate of U.S. energy companies, including shale oil producers facing disaster. Whiting Petroleum, a big shale producer in North Dakota, filed for bankruptcy protection this week.
“You don’t want to lose an industry. You’re going to lose an industry over it,” Mr. Trump said. “Thousands and thousands of jobs.”
Administration officials have pressed Saudi Arabia for weeks to change course. On March 25, Secretary of State Mike Pompeo spoke with Prince Mohammed and urged Saudi Arabia to “rise to the occasion and reassure global energy and financial markets,” according to a State Department readout of the call. Mr. Trump spoke with the crown prince on March 31. But their pleas appeared rebuffed when Saudi Aramco, the national oil company, tweeted boastfully on April 1 about its continued production.
During a teleconference briefing last month, the American ambassador to Saudi Arabia, Gen. John Abizaid, said Prince Mohammed’s decision to increase production seemed impulsive and driven by pique against Moscow, and was poorly coordinated across the Saudi government, according to an American official familiar with the discussion.
Independent of American pressure, Saudi Arabia has, along with its allies in the Organization of the Petroleum Exporting Countries, reason to reverse course on the decision to boost production. In recent days, the kingdom’s tankers left port brimming with oil but with few destinations as global inventories filled to the brim. With tanker fees climbing fast, the kingdom’s shipping costs are rising to painful levels.
Saudi Arabia depends on oil revenues to finance its sweeping social programs, and much of its population owns shares of Saudi Aramco, which was partly privatized last year and whose shares have sharply declined over the past month.
Prince Mohammed also has a strong interest in retaining Mr. Trump’s good will, which was not diminished even in the face of evidence of the crown prince’s role in the killing of Jamal Khashoggi, a columnist for The Washington Post, according to Hussein Ibish, a senior resident scholar at the Arab Gulf States Institute. The crown prince now faces threats from Iran and a continuing military quagmire in Yemen.
“It looks like Riyadh might be willing to compromise a little more with Moscow because, in the cold light of day, this isn’t going to work very well for Saudi Arabia — or Russia for that matter,” Mr. Ibish said. “But they’re also clearly linking it to pressure from the U.S. in general and Trump in particular, and making it clear that they are trying to, in effect, do him a favor.”
Saudi Arabia’s statement on Thursday said its call for a meeting of oil producers was “in appreciation of President Donald Trump of the United States of America’s request and the U.S. friends’ request.”
Russia has its own problems in the face of shrinking demand. It has thousands of aging oil wells across Siberia far from markets that will soon be producing oil with no place to go. Shutting those wells would deprive the country revenues, but also lead to extra costs to revive them later, a process that could damage some of the fields permanently.
In one indication that Russia had softened its stance, Russia’s energy minister, Aleksandr Novak, told Reuters that Russia no longer planned to ramp up production after the collapse of its deal with OPEC last month.
But some energy analysts predicted that even after supply cuts, global oil prices would soon resume their steep decline because markets are likely to be oversupplied through at least the first half of the year. A recent Citibank research report said that any potential agreement by American, Saudi and Russians officials “looks like it is too little too late.”
President Trump said on Thursday that he did not agree to cut American oil production in return for cuts from Russia and Saudi Arabia.
The $25 price for the American oil benchmark is still at least $15 below the break-even price for the typical American oil well, leaving much of the industry in jeopardy unless demand recovers quickly. Nevertheless, deeply depressed shares of Chevron, Exxon Mobil and ConocoPhillips surged by more than 8 percent after Mr. Trump’s tweet.
The industry received little from the recent $2.2 trillion stimulus package, as Congress refused to endorse an administration proposal to buy $3 billion in oil to add to stockpiles in the Strategic Petroleum Reserve.
Analysts said that because of the crushing economic blow of the coronavirus pandemic, cuts in oil production were inevitable.
“Oil production is going to go down anyhow,” said Bhushan Bahree, a senior director at IHS Markit, a research firm. “The question is whether they are going to be managed or enforced through brutal shutdowns.”
Michael Crowley reported from Washington, Clifford Krauss from Houston and Andrew E. Kramer from Moscow. Mark Mazzetti and Edward Wong contributed reporting from Washington, and Stanley Reed from London.
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