Saudi Arabia and Russia are flooding the market with oil in a “direct attack” on U.S. producers, oil tycoon Harold Hamm said.
“They’re taking advantage of this coronavirus pandemic that’s sweeping the world to focus in on this industry and devastate it,” Hamm, founder and executive chairman at Oklahoma City-based Continental Resources Inc., said during an interview on Fox Business’ “Cavuto Coast to Coast” last week.
“That’s not gonna happen. We’re gonna take action on them. We’re gonna investigate that,” Hamm said.
Related: Russian oil power play targets U.S., but may backfire, March 13, 2020
Hamm said the Domestic Energy Producers Alliance has taken action to pass a resolution and start an anti-dumping investigation into Saudi Arabia, Russia and possibly other countries.
The price of crude oil plunged by more than 20 percent after Saudi Arabia slashed its price and Russia declined to join OPEC in cutting supply. The initial selloff contributed to a more than 2,000-point drop for the Dow Jones Industrial Average.
U.S. shale producers, which on aggregate need oil to be priced in the upper $40s to be profitable, saw their market capitalizations plunge as crude fell as low as $27.34 a barrel, Fox Business reported. The selling also hit U.S. banks, which have loan exposure to the shale patch.
“Does it damage the industry? Absolutely,” Hamm said. Russia and Saudi Arabia both “know that, and that’s why they’re taking this action. Can we stop them? We certainly can.”
It’s the second time in five years that Saudi Arabia, an OPEC member, has tried to eliminate oil and gas competitors by keeping global prices very low. In this case, Saudi Arabia announced it would not only cut its crude oil prices to Europe and Asia — markets of particular importance to Russia — but ramp up its production 2 million barrels per day after Russia refused to agree to production cuts of 1.5 million barrels per day.
Russia, meanwhile, has announced it will increase production by 500,000 barrels per day.
The oversupplied market was already facing declining demand amid travel restrictions and factory suspensions that were aimed at curtailing the spread of coronavirus.
Radio host Rush Limbaugh said that “what is happening with the stock market” is “85 percent this. It is the crown prince of Saudi Arabia declaring open warfare on Russia involving the price of oil and the flow of oil, the free flow of oil at market prices is what this is all about. And the crown prince of Saudi Arabia, he’s taking advantage of the fact that they’ve got more oil than they know what to do with.”
Saudi Crown Prince Mohammed bin Salman “is lowering the price and trying to run people out of the market by making it impossible for them to stay in it,” Limbaugh said. “He cannot do damage to us in this regard because we don’t need their oil anymore, and that’s thanks to who? That’s thanks to American capitalism and fracking and people who stuck with that despite all of the environmentalist wackos trying to shut ’em down. Despite all of the left-wing Democrats trying to shut down pipelines and fracking, we are no longer dependent on Saudi Arabia.”
Limbaugh continued: “I also think that as weather warms up the coronavirus is gonna spin itself out. The coronavirus is basically attacking the elderly. It’s gonna spin itself out despite all of this panic. And these two things combined, the plunge in consumer petroleum prices led by gasoline and the eventual spinning out of the coronavirus, we’re gonna see an economic rebound like you can’t believe. All of this that we’re losing is gonna be made back, I think, in record time. And it will happen before the election.”