Prospect of US-Russia talks lift oil prices from 18-year lows

Oil prices recovered some ground during Tuesday trading as US President Donald Trump and Russian President Vladimir Putin agreed to discuss ways to stabilise the market, after seeing benchmark prices sink to 18-year lows yesterday.

The oil sector in 2020 has been ravaged by plummeting demand stemming from the COVID-19 (coronavirus) outbreak and the collapse of a longstanding OPEC-led supply cuts agreement which has led to a price war between Russia and Saudi Arabia.

However, after closing on Monday at its lowest point since November 2002, Brent crude rose by 1.9% to US$23.19 a barrel in early Tuesday trading. US crude also bounced back from its lowest close since 2002, rising by 5.8% to $21.26 per barrel.

The market was responding to an announcement from the Kremlin of a phone call between Trump and Putin, in which the leaders agreed to have their top energy officials discuss stabilising oil markets.

A potential intervention by the US and Russia would provide much needed relief to the oil sector, which has lost around 60% of its value since the start of the year. The market is also set to be flooded with more Saudi oil after the de factor OPEC leader said it plans to boost its exports to 10.6 million barrels per day in May.

Meanwhile, global oil refiners have cut their throughput because of the falling demand for transportation fuel, while storage facilities are quickly filling up with stockpiled oil supply.