The deal reached between OPEC, Russia, and other oil-producing nations earlier this week to cut 10 million barrels of oil has worked to "stem the damage" that was done to the market because of the Saudi Arabia-Russia oil price war and the coronavirus pandemic, but still, prices "may be at a floor," according to Energy Secretary Dan Brouillette.
"Think about what would have happened in the alternative had there been, instead of a cut of 10 million on the part of OPEC and OPEC+, what if that number had been zero, what would we be looking at today suggests that it’s probably something much lower than where we are,” Brouillette said in an interview with CNBC, the network reported Wednesday. “And I think we may be at a floor. I think the intent of this conversation with OPEC and the rest of the G-20 countries is simply to do exactly that, to mitigate.”
Oil prices remain down by more than 55% and fell by 10% on Tuesday alone, but Brouillette said they could have gone even lower without the agreement and that the United States had not expected prices to jump.
“I think it was more important for us to stem the losses that were occurring all throughout the marketplace as a result of some of the activities and that loss of demand as a result of the pandemic," said the secretary. "It is very important that we not allow the market to continue down to what could have been single-digit numbers for the price of a barrel of oil.”
The price wars also hit the U.S. shale industry hard, but Brouillette said he is optimistic for its future "once we get on the other side of this event."
However, he warned that there are some industry players who are "heavily leveraged" and may not survive the pandemic.
Brouillette also credited Trump with acting "aggressively" while pushing Russia and Saudi Arabia into ending the price wars, noting that he's said clearly that he won't allow "predatory activity" on the U.S. markets.
Meanwhile, Saudi Energy Minister Prince Abdulaziz Bin Salman denied in an interview airing Wednesday on Fox Business that his country intentionally drove down the price of oil to cripple the United States energy industry.
"Never, I have friends, I have pals, we have good relationships with them," he told anchor Maria Bartiromo. "I was in public many times in December saying we like them, we want to prosper with them, and we never engaged in a so-called zero-sum game."
He also insisted that Saudi Arabia will continue with its commitment to cut oil production, even if Russia or other countries do not.
"None of us will gain if we don't continue with our commitment," he said. "We would not have signed to it."
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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