Oil Prices Crash to Lowest Levels in Decades
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Prices of oil fell on Monday to the lowest level since 2002, with WTI crude briefly falling below $20 a barrel.
The price of West Texas Intermediate, or WTI crude, fell 6.65 percent Monday morning, trading at around $20.09 by 10:30 a.m. The global benchmark Brent crude was down by around 10 percent to $22.39.
President Donald Trump said on Monday morning that he would talk to Russian President Vladimir Putin about oil supplies. A price war between Saudi Arabia and Russia is thought to be responsible for the recent steep decline in oil prices.
Oil prices are too low for many drillers to profitably extract oil from U.S. sites. Most oil market watchers believe prices need to be between $40 and $50 a barrel for U.S. extraction to break-even.
Gasoline prices in the U.S. have fallen to $1.97 on average, the lowest in decades.
GOP senators slam Saudi Arabia for waging 'economic warfare against the United States'
A group of Republican senators chastised Saudi Arabian officials for flooding the global oil market in a fight against Russia.
Texas Sen. Ted Cruz joined eight Republican colleagues on a conference call in which they demanded Saudi Arabia’s ambassador to the United States, Reema bint Bandar Al Saud, to push the Saudi regime into curbing its oil production, Cruz told CNBC.
"The Saudis and the Russians chose to take advantage of [the coronavirus pandemic] by flooding the market and driving the price of oil way, way down," Cruz said in a Monday interview.
Russia and Saudi Arabia have been flooding the oil market and tanking oil prices since early March.
Thirteen GOP senators, including Cruz, sent a letter to the Saudi government last week, urging it to ease oil production and let the global rates stabilize. Nine of those senators followed up on the letter in the conference call.
Cruz said that the Saudi official blamed Russia for the trade war to which he and other senators responded by threatening U.S. economic and foreign policy action against Saudi Arabia.
"We quite frankly unloaded on her," Cruz said. "We said, 'Listen, there are a whole series of steps we can take to escalate foreign policy pressure — and we outlined a number of them — if you continue engaging in economic warfare against the United States trying to drive down the price of oil in order to exploit this coronavirus crisis to drive a bunch of American producers out of business.'"
Russia and Saudi Arabia engaged in a price war after Moscow broke an agreement with the Saudi regime to cut oil production. Riyadh began boosting its own oil production in response.
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