— This is the script of CNBC's news report for China's CCTV on April 3, 2020, Friday.
Both Russia and Saudi Arabia were quick to deny US President Donald trump's suggestion that Russia and Saudi Arabia had agreed to cut output by 10m or even 15m barrels. So international oil prices have fallen. Meanwhile, we've seen the Saudis call for an emergency meeting of OPEC and its allies.
It also said Saudi Arabia was willing to make large cuts if other countries agreed. That has renewed hopes for a deal. At a news conference on Thursday, Trump still believed that would happen soon，
So it would be great for Russia, it would be great for Saudi Arabia if they made a deal. I think it'll be soon. I think hopefully they'll announce something soon. Can a deal be broken? I guess. In which case there's another alternative. But I'd rather not see that. I hope they can make a deal. They both want to make a deal.
Still, some analysts tell us that a cut deal not just need the agreement from OPEC and its allies, but also that from the US.
I've just been going back and forth minutes ago literally with somebody inside of Aramco to talk about this a little bit. Any 10 million cut or more must include the US producers, so I don't know I you are saying that like mathematically it must, here is the reality, you are not gonna take half of Saudi's and or Russia's production offline, no country could physically do that, it has to include US producers.
The United States is now the world's largest producer of crude oil and has not had government control of its production for 50 years since 1970. Even they reach a cut deal of 10 million barrels or 15 million barrels, then he international crude oil market will still be in a situation of oversupply.
As a result of the outbreak, oil demand has now been reduced by about 20 million barrels a day. With the recent collapse in international oil prices, traders are hoarding crude, International oil storage space, both onshore and offshore, has been sharply reduced. Some analysts believe that the global oil storage space may hit the upper limit in the middle of this year. For many small energy firms, shutdowns are worse than loss-making.
We have already seen US shale companies file for bankruptcy in the wake of the current oil price. The industry believes this could be just the beginning if things don't get better. There will be more bankruptcies and mergers in energy sector, President Trump also plans to meet with the heads of major U.S. energy companies on Friday to discuss solutions to tackle the crisis in the energy sector.
In addition to the possibility of production cuts, other possibilities being discussed include a tax on Saudi crude oil and abandoning the Jones act, which has existed for 100 years or making some kind of exemption. It is also aimed at reducing Saudi oil market share in the United States.
But such protectionist measures are likely to have more complex and even counterproductive consequences. Texas, the nation's energy powerhouse, has been the hardest hit. The head of the Railroad Commission of Texas., the local agency that regulates oil and gas, also spoke on social media on Thursday,
Saying they have spoken to Russia's energy minister about the possibility of cutting global oil production by 10m b/d. He said while they were rivals, they needed to work together in special times, and he looked forward to speaking to the Saudi energy minister soon.
Whichever way you end up doing it, it's probably going to be historically significant, we will keep an eye on this issue.