President Donald Trump said on Monday that his administration was considering the possibility of stopping incoming Saudi Arabian crude oil shipments as a measure to support the battered domestic drilling industry.
“Well, I’ll look at it,” Trump told reporters at a daily news conference after he was asked about requests by some Republican lawmakers to block the shipments under his executive authority. Trump said he had heard the proposal immediately before the news briefing. “We certainly have plenty of oil, so I’ll take a look at it,” he said.
U.S. crude oil futures collapsed to trade in negative territory for the first time in history on Monday, amid a coronavirus-induced supply glut. Futures ended the day at a stunning minus-$37.63 a barrel as desperate traders paid to get rid of oil as storage space was close to running out. The collapse in prices has threatened to tilt the once-booming U.S. oil industry into bankruptcy.
Trump described the drop as short-term and stemming from a “financial squeeze,” but said the oil industry was hurting from a lack of demand, as states have imposed stay-in-place restrictions to curb the spread of the virus.
“The problem is no one is driving a car anywhere in the world, essentially. … Factories are closed, businesses are closed,” Trump said. “We had really a lot of energy to start off with, oil in particular, and then all of a sudden they lost 40%, 50% of their market.”
He said the global producer group known as OPEC+ had agreed to cut production by some 15 million barrels per day, and said weak prices could force more declines for economic reasons. “They have to do more by the market, it’s the same thing over here. If the market is the way it is, people are going to slow it down or they’re going to stop. That’s going to be automatic, and that’s happening,” Trump said.
Trump reiterated that his administration plans to top up the nation’s emergency crude oil stockpile as prices plunge. The Department of Energy is in the process of leasing some of the roughly 77 million barrels of available space in the Strategic Petroleum Reserve to U.S. oil companies to help them deal with dearth of commercial storage as the coronavirus outbreak crushes domestic energy demand.
The administration initially wanted to purchase the crude oil directly, but Congress has yet to approve the funding. Asked if he still wanted lawmakers to approve the funding, Trump said the space in the SPR would be filled either way.