The price of Mexico’s export crude increased by more than 51% on Thursday after United States President Donald Trump said on Twitter that he expected Saudi Arabia and Russia to cut oil production significantly as demand plummets due to the coronavirus pandemic.
Pemex reported that a barrel of Mexican crude was selling at US $16.05 per barrel at the close of trading on Thursday, an increase of $5.44, or 51.3%, compared to Wednesday’s closing price of $10.61.
The financial group Banco Base said that the main reason for the gain was a tweet sent by Trump on Thursday morning although it acknowledged that China’s decision to purchase oil to increase its reserves was also a factor.
“Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!” Trump wrote.
“Could be as high as 15 Million Barrels. Good (GREAT) news for everyone!” The U.S. president added in a second tweet.
Saudi Arabia and Russia entered into an oil price war in March after the latter country refused to reduce its production even as demand dropped due to the coronavirus pandemic. Saudi Arabia, the world’s second largest oil producer after the United States, increased its production in retaliation, flooding international markets with cheap crude.
Oil prices, including those paid for Mexican crude, slumped in response. On Tuesday of this week, a barrel of Mexican crude was selling for just $10.37, its lowest level since March 1999.
The West Texas Intermediate and Brent prices, the two main benchmark prices for oil, have also taken a hit recently but both closed more than 20% higher on Thursday after Trump’s Twitter intervention even though there is doubt about whether Saudi Arabia and Russia will actually cut their production.
Neither of the two countries publicly committed to a reduction and a spokesman for the Russian president said that Putin had not spoken with the Saudi Crown Prince, Mohammed Bin Salman.
“There was no conversation,” said Dmitri S. Peskov.
Source: Milenio (sp)