US President Donald Trump gestures after arriving on Capitol Hill as US Senate Majority leader Mitch McConnell (R-KY) and Senator Roy Blunt (R-MO) look on in Washington, DC on March 10, 2020.
Nicholas Kamm | AFP | Getty Images
As oil prices decline and pressure energy companies, President Donald Trump will reportedly likely seek a federal aid package for struggling U.S. producers, The Washington Post reported Tuesday, citing four people familiar with the matter.
The aid would likely be in the form of low-interest government loans, The Washington Post said.
Monday was the energy sector’s worst day on record, as oil prices slid 24% to more than four-year lows. Recent losses are accelerating declines in the oil patch, which has been struggling for years.
Every component in the sector is currently trading in a bear market, or more than 20% below recent highs.
On Tuesday, Occidental Petroleum slashed its quarterly dividend by 86%, while also cutting its capital spending program, and similar announcements could be coming for the other companies in the industry.
Monday’s steep slide came after talks between OPEC and its allies deteriorated.
On Friday, OPEC ally Russia rejected the additional 1.5 million barrel per day production cut that the 14-member cartel proposed. The current production cuts expire at the end of March, which means that beginning April 1 nations can pump as much oil as they want.
After the unsuccessful talks concluded, OPEC’s de facto leader Saudi Arabia on Saturday slashed its official oil prices.
Saudi Aramco CEO Amin Nasser said on Tuesday that the kingdom plans to supply a record 12.3 million barrels per day in April, well above current production level of 9.7 million bpd.
In response, Novak said that Russian oil companies may boost output by up to 300,000 barrels per day, according to a report from Reuters, while noting that the country has the ability to increase production by as much as 500,000 barrels per day.
This potential oversupply comes at a time when oil prices were already moving lower after the coronavirus outbreak and subsequent travel slowdown has led to soft demand for crude.
President Trump on Monday sought to play down the plunging price of oil as markets tanked, saying that lower gas prices were good for consumers.
“Good for the consumer, gasoline prices coming down!” Trump wrote in one of a series of posts on Twitter. He also said, “Saudi Arabia and Russia are arguing over the price and flow of oil. That, and the Fake News, is the reason for the market drop!”
As prices sank on Monday, the U.S. Department of Energy released a statement saying the Trump Administration was monitoring the situation.
“These attempts by state actors to manipulate and shock oil markets reinforce the importance of the role of the United States as a reliable energy supplier to partners and allies around the world,” the statement said. “The United States, as the world’s largest producer of oil and gas, can and will withstand this volatility. The growth of the unconventional oil and gas industry in the United States has led to a more secure, resilient and flexible market.”
The White House declined to comment.
To read the full article from The Washington Post click here.
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
Originally published at CNBC