U.S. senators on Wednesday raised pressure on Saudi Arabia and Russia to stop the price war that is sinking global oil prices as they held talks with the kingdom’s U.S. envoy and separately urged President Donald Trump to impose an embargo on oil from the two countries.
Oil prices plummeted to 18-year lows on Wednesday as governments around the world accelerated lockdowns to counter the coronavirus pandemic that is causing global fuel demand to collapse. [O/R]
A war over crude oil market share between petroleum producers Russia and Saudi Arabia, which erupted after their three year deal to curtail output collapsed earlier this month, has exacerbated the price plunge. It has also led to charges by some U.S. lawmakers that Russia and Saudi Arabia were targeting U.S. shale oil producers who have higher production costs.
“Unfortunately, these bullying tactics by Russia have become the norm, but the actions of our close strategic partner Saudi Arabia are particularly concerning,” Senator Kevin Cramer of oil-rich North Dakota, said in a letter to fellow Republican Trump.
Cramer, who advised Trump’s 2016 campaign, urged the president in the letter, a copy of which was seen by Reuters, to embargo oil from Russia, Saudi Arabia, and “other OPEC nations like Iraq.”
Cramer and nine other Republican senators including John Hoeven and Dan Sullivan, had a call on Wednesday with Saudi Ambassador to the United States Princess Reema bint Bandar bin Sultan, hoping to convince the kingdom to stop flooding global oil markets.
“We need stability in the oil markets during these challenges with COVID-19 to ensure we don’t lose long-term capacity in this essential industry,” Hoeven said in a statement about the call.
Cramer and Sullivan had written a letter on Monday to Saudi Arabia’s Crown Prince Mohammed bin Salman, signed by 13 senators, reminding the de facto leader that the United States has been a “strong and reliable partner for decades” but that the output boost has called into question the role of the kingdom as a force of stability in oil markets.
Trump, who is running for re-election in November, at first celebrated low fuel prices. “Good for the consumer, gasoline prices coming down!” Trump wrote in a tweet last week. He has long championed a policy of energy dominance which has included offering Europe U.S. natural gas exports as an alternative to Russian natural gas.
The Trump administration also recently placed sanctions on Russia’s Nord Stream 2 natural gas pipeline to Germany and on a unit of state oil company Rosneft over marketing of Venezuelan crude oil.
On Friday Trump called on the Energy Department to buy 77 million barrels of oil to stash in the Strategic Petroleum Reserve, to help support domestic oil producers. But some of that nearly $2 billion cost, at Wednesday’s prices, would have to be paid by Congress.
Trump talked about oil markets with Saudi’s crown prince in a call on March 9. In addition, the U.S. ambassador to Saudi Arabia John Abizaid spoke with the Saudi energy minister last Thursday about oil markets, the State Department said, but there have been few details about those conversations.