The Russian and US presidents, Vladimir Putin and Donald Trump, have agreed to set up lines of communication between their respective energy administrators.
This step has been taken so they can cooperate on ways to address the low prices currently affecting the world’s oil markets, although no details have been given about the possible interventions that may be considered.
The Kremlin said to Reuters that the agreement was reached during a phone call between the two premiers on Monday, March 30. The Kremlin said:
“Opinions on the current state of the global oil markets were exchanged. It was agreed there would be Russo-American consultations about this through the ministers of energy.”
Oil producers are currently facing something of a perfect storm. The year started with an oversupply problem that was exacerbated by the Chinese lockdown in response to the COVID-19 outbreak, with this followed by further lockdowns around the world as the outbreak became a pandemic. On top of this, Russia and Saudi Arabia are currently embroiled in a price war as the existing OPEC+ production-cuts deal expires.
US oil producers, meanwhile, are caught in the crossfire. While many of the bigger upstream operators in the US like ExxonMobil and BP have the resources to weather the storm, as well as downstream operations like producing lubricant products under brands like Mobil and Castrol, many smaller operators in the shale patches may struggle to stay in business. There are even suggestions that the US may sign up to a future production-cuts deal to stabilise the oil markets.