The Trouble Putin Did Not See Coming: Trump Tanks Crude Oil Price

The Barrel and the Noose-- Putin needs every drop. Oil prices may not cooperate.

On March 6, 2020, the oil cartel met in Vienna. On the table was a proposal to cut oil production to stabilize prices, which were already in freefall due to the arrival of COVID-19. Russia refused the plan put forward by Saudi Arabia. And fearing that unilateral cuts would simply result in ceding market share to Moscow, the Saudis walked away too.

The talks collapsed—and a full-blown oil price war began. It turned into a “blink first” showdown between two energy giants. The main reason Russia refused to cut, I believe, was twofold:

• First, they feared that U.S. shale producers—known for ramping up quickly—would just fill the gap and gain share.

• Second, they needed cash. A war was coming, and Russia needed to keep the money flowing.

Thanks to the fight within the cartel, oil prices plunged toward $50.

We’re now facing eerily similar dynamics.

This time, it’s not a virus—it’s Donald Trump’s global economic war that’s rocking markets. Crude oil is getting battered. WTI has dropped from $71 on April 2 to $60 at the time of writing. It’s mounting one hell of a fight just to decide whether it stays below $60 or claws its way back above.