---
title: "Oil Retreats After Sharp Rally on Doubts Over Price-War Truce"
description: "Oil gave up some of last week’s rally after a delay to a planned meeting of top producers to discuss output curbs and signs the U.S. won’t join any deal raised doubts over the prospects for an agreement."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "Business Maverick"
author: "Bloomberg"
author_url: "https://www.dailymaverick.co.za/author/bloomberg/"
canonical_url: "https://www.dailymaverick.co.za/article/2020-04-06-oil-retreats-after-sharp-rally-on-doubts-over-price-war-truce/"
published: "2020-04-06T04:49:09"
lang: "en-ZA"
word_count: 576
---

# Oil Retreats After Sharp Rally on Doubts Over Price-War Truce

> Oil gave up some of last week’s rally after a delay to a planned meeting of top producers to discuss output curbs and signs the U.S. won’t join any deal raised doubts over the prospects for an agreement.

By Bloomberg · Published 6 April 2020, 06:49 SAST

## Content

Oil futures dropped around 4% in London after surging by half of their value over the previous three sessions as a production accord started to take shape. However, a virtual gathering of the OPEC+ alliance that was originally scheduled for Monday was postponed to Thursday as Saudi Arabia and Russia [traded barbs](https://www.bloomberg.com/news/articles/2020-04-04/saudi-arabia-says-putin-s-comments-on-opec-deal-is-incorrect) over who was to blame for the collapse in oil prices.

[Some progress](https://www.bloomberg.com/news/articles/2020-04-05/oil-negotiators-race-for-global-pact-with-u-s-role-in-balance) was made toward an agreement on Sunday, according to diplomats, but the lack of participation from the U.S. -- the world’s largest producer -- could prove to be a stumbling block. Despite originally calling for the deal, President Donald Trump on Saturday described OPEC as a cartel and [threatened tariffs](https://www.bloomberg.com/news/articles/2020-04-04/trump-says-he-d-use-tariffs-if-needed-to-protect-oil-industry) on foreign oil. Trump said late Sunday in Washington that he could impose “very substantial” levies but [doesn’t think](https://www.bloomberg.com/news/articles/2020-04-06/trump-says-he-doesn-t-expect-to-impose-tariffs-on-oil-imports) he’ll need to.

The aim of the talks is to cut production by about 10 million barrels a day, around 10% of global production. But whether that can support prices that have fallen by more than half this year as the coronavirus crippled the global economy is questionable. The International Energy Agency said Friday the deepest cuts in the industry’s history wouldn’t be enough to calm the market.

“The likelihood of a deal being done is extremely low,” said Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group Ltd. “Certainly the type of agreement you’d need to stabilize the market is a long shot given how much demand has been hit.”

Brent crude fell 4.2% to $32.69 a barrel on the ICE Futures Europe exchange as of 9:42 a.m. in Singapore. It rallied 37% last week and is down 50% so far this year. The contract’s six-month contango deepened to more that $5 a barrel from $3.96 on Friday, indicating an abundance of supply.

West Texas Intermediate declined 6.5% to $26.51 a barrel on the New York Mercantile Exchange after dropping as much as 11% earlier. The contract surged 32% last week and has fallen 57% in 2020.

Trump walked out of a [meeting](https://www.bloomberg.com/news/articles/2020-04-03/trump-to-get-earful-on-tariffs-in-meeting-with-oil-industry) with the titans of America’s oil industry on Friday without any public declaration of a plan to curtail domestic output, calling into question his ability to broker a truce between Riyadh and Moscow.

| More on OPEC+ meeting |
| --- |
| - [Russia Can Reduce Its Oil Output by 10% if the U.S. Joins Cuts](https://www.bloomberg.com/news/articles/2020-04-04/russia-can-reduce-its-oil-output-by-10-if-the-u-s-joins-cuts) - [Norway May Join Oil Output Cuts for First Time Since 2002](https://www.bloomberg.com/news/articles/2020-04-04/norway-may-join-oil-output-cuts-for-the-first-time-since-2002) - Iraq Oil Minister Is Optimistic OPEC+ Can Reach Output-Cuts Deal - UAE Calls for Producers Outside OPEC+ to Help Stabilize Market |

Oil diplomats are now trying to stitch together a meeting of G20 energy ministers for Friday, part of an effort to bring the U.S. on board, according to two people familiar with the situation. While both Saudi Arabia and Russia have expressed openness to coordinated production cuts, it’s unclear that can be achieved without the U.S. and other nations also taking part.

A deal to curb production is likely to happen, Stephen Innes, chief Asia market strategist at AxiCorp Ltd., said in a note released Monday. But cuts may not be enough to address the near- or medium-term oversupply, he said.

[See also: Here’s How Saudi Arabia Can Save the Oil Industry: Julian Lee](https://www.bloomberg.com/view/articles/2020-04-05/how-saudi-arabia-can-save-oil-industry-from-single-digit-prices)

Meanwhile, Saudi Aramco is [delaying](https://www.bloomberg.com/news/articles/2020-04-05/aramco-delays-oil-pricing-amid-saudi-russia-row-on-oil-cuts) the release of its closely-watched monthly oil-pricing list until Thursday to wait for the outcome of the OPEC+ meeting, according to people with knowledge of the situation. The [official selling prices](https://www.bloomberg.com/news/articles/2020-04-03/saudis-face-pricing-dilemma-as-oil-war-enters-second-month) were due on Sunday.