The oil price war between Saudi Arabia and the Russian Federation, with both countries ramping up oil production in a time of dramatically reduced consumer demand worldwide, has moved crude oil prices to 20 year lows this week.  U.S. President Trump, concered about what role low crude oil prices might play in his re-election, said this past week that he would get involved in this price war at the appropriate time.

“We are trying to find some kind of a medium ground,” Trump told reporters at a White House news conference, adding that he had spoken to several people about the dispute. “It’s very devastating to Russia because when you look at it, their whole economy is based on that and we have the lowest oil prices in decades so it’s very devastating to Russia. I would say it is very bad for Saudi Arabia but they’re in a fight, they’re in a fight on price, they’re in a fight on output. At the appropriate time I’ll get involved,” he said.

Saudi Arabia has among the lowest lifting costs in the world, enabling the Saudis to maintain the pressure of the status quo ante while other producers struggle to stay alive.  Particularly hard hit are the U.S. companies producing oil from shale, and few will be able to cover the costs of production in this low price environment.

Against this backdrop there has been a frenzy of activity in Washington, D.C. Nine Republican senators, including Kevin Cramer of oil-producing North Dakota who advised Trump on energy in his 2016 campaign, had a call on Wednesday with Saudi Ambassador to the United States Princess Reema bint Bandar bin Sultan, hoping to convince the kingdom to stop flooding global oil markets.  The U.S. ambassador to Saudi Arabia, John Abizaid, spoke with the Saudi energy minister last Thursday about oil markets, the State Department said. And President Trump has had a personal conversation with Saudi ruler Mohammad bin Salman. There have been few details about those conversations.  

That said, the Trump administration is considering a diplomatic push to get Saudi Arabia to close its taps and using the threat of sanctions on Russia to force them to reduce output, the Wall Street Journal reported, quoting unidentified sources.