* Trump says cuts of 10-15 mln barrels per day possible
* Saudi Arabia calls emergency OPEC meeting
* Oil prices surge, give back some gains
* Fuel demand has slumped on coronavirus outbreak
(Recasts throughout, adds quotes, details on meetings in
Washington, context)
By Rania El Gamal, Vladimir Soldatkin and Jeff Mason
DUBAI/MOSCOW/WASHINGTON, April 2 (Reuters) - U.S President
Donald Trump said on Thursday he had brokered a deal with top
crude producers Russia and Saudi Arabia to cut output and arrest
an oil price rout amid the global coronavirus pandemic, though
details of how the cut would work were unclear.
Trump said the two nations could cut output by 10 to 15
million barrels per day (bpd) - an unprecedented amount
representing 10% to 15% of global supply, and one that could
necessitate the participation of nations outside of OPEC and its
allies.
A senior U.S. administration official familiar with the
matter said Trump would not formally ask U.S. oil companies to
contribute to the production cuts, a move which is forbidden by
U.S. antitrust legislation.
Russia and Saudi Arabia have been at odds since early March,
when the two nations failed to agree on a deal curbing output as
the coronavirus spread around the globe. The pandemic has
worsened since, freezing economic activity and sending oil
prices into a tailspin as producers confronted the prospect of a
dramatic fall in demand with a flood of unwanted oil supply.
Saudi Arabia, the de facto head of OPEC, called on Thursday
for an emergency meeting of OPEC and non-OPEC oil producers, an
informal grouping known as OPEC+, state media reported, saying
it aimed to reach a fair agreement to stabilise oil markets.
Trump is separately set to meet with U.S. oil industry
executives on Friday.
Global oil demand is expected to fall by about 30 million
bpd in April, or about one-third of daily consumption, as some 3
billion people have been put in lockdown to slow the spread of
the coronavirus pandemic, which has sickened nearly 1 million
people worldwide and killed nearly 50,000.
The immense decline in demand sent oil prices to their
lowest levels since 2002, close to $20 per barrel, hitting
budgets of oil producing nations and dealing a huge blow to the
U.S. shale oil industry, which cannot compete at low prices.
The downward pressure has been exacerbated by the battle for
market share between Russia and Saudi Arabia. Russia rejected
the Saudi proposal to take supply off the market in part because
it has cut its own output for years while U.S. production grew
to a record 13 million bpd, gobbling up more market share.
Russian Energy Minister Alexander Novak said on Thursday
that Moscow was no longer planning to raise output and said it
was ready to cooperate with the Organization of the Petroleum
Exporting Countries and other producers to stabilise the market.
It was not clear when Saudi Arabia's proposed emergency OPEC
meeting could be held.
"This invitation comes within the framework of the kingdom's
constant efforts to support the global economy in this
exceptional circumstance, and in appreciation of the U.S.
president's request and the U.S. friends' request,” the state
news agency SPA reported.
A meeting could represent a thaw in Saudi-Russia tensions. A
senior Gulf source familiar with Saudi thinking told Reuters
that Russia's opposition to its proposal to deepen output cuts
was the cause of market turmoil.
At the time of the deal's collapse, OPEC and its allies were
collectively cutting output by about 1.7 million bpd - making a
10-to-15 million-bpd cut a big hurdle unless it brought in other
major worldwide producers outside of the cartel.
Market observers were shocked by the swift movements by
Saudi Arabia when the three-year-deal collapsed, as it quickly
ramped up production, cut its official selling prices for its
crude, and chartered tankers to deliver shipments worldwide.
"This is terrifically damaging to them all. I think to the
extent that the Saudis can get some cooperation, I think they
would be willing to lead the way," said John Kilduff, a partner
at hedge fund Again Capital in New York.
OUTPUT CUTS
The downturn in demand is forcing producers to curtail
drilling and well completion activities. That is expected to
accelerate as refiners are faced with gasoline and jet fuel
barrels going unsold, and storage rapidly fills worldwide.
"I don't think this does anything in the near term. Our
pipelines have told us they don't have room for our barrels,"
said Bob Watson, chief executive of U.S. shale producer Abraxas
Petroleum, based in San Antonio, Texas. Within eight weeks there
will be major issues as production outstrips storage capacity,
he said.
Major global oil producers, including Chevron Corp,
Brazil's Petrobras and Royal Dutch Shell, have
announced plans to sharply scale back production.
The free-fall in prices has spurred regulators in the U.S.
state of Texas, the heart of that country's oil production, to
consider regulating output for the first time in nearly 50
years.
Brent oil prices stood 18% higher at $29.22 per barrel at
2:12 p.m. ET (1812 GMT), having earlier risen to as high as
$36.29. U.S. benchmark WTI crude was 16% higher at $23.53.
Even with Thursday's surge, Brent is still less than half
its $66 closing level at the end of 2019.
(Reporting by Rania El Gamal in Dubai, Vladimir Soldatkin in
Moscow and Jeff Mason in Washington; additional reporting by
Jessica Resnick Ault and Laila Kearney in New York; Writing by
Dmitry Zhdannikov and David Gaffen; Editing by Edmund Blair and
Tom Brown)