As a part of measures to combat the negative economic impact from the spread of the virus, Trump has instructed US Energy Secretary Dan Brouillette to purchase large amounts of oil to fill the nation's strategic reserve "up to the top".
"Based on the price of oil, I’ve also instructed the Secretary of Energy to purchase... large quantities of crude oil for storage in the US strategic reserve. We are going to fill it right up to the top. It puts us in a position that’s very strong, and we are buying it at the right price", Trump said.
The statement prompted oil prices for benchmark WTI and Brent to rebound slightly after a significant drop, rising 5 percent, to $33,13 and $34,93 accordingly, market data revealed. Earlier this week, oil fell more than 24 percent. Trump has reportedly chosen the right timing for the purchase of the crude as the market experiences a severe crisis.
COVID-19 Oil Market Impact
The COVID-19 outbreak has shattered financial markets across the globe, prompting a worldwide slump in equities pricing.
Oil prices swiftly dropped earlier this week after Trump imposed a travel ban into the US for many passengers coming from selected European countries - another measure to stop the spread of the outbreak.
Authorities across the globe continue to impose tough measures to combat the pandemic, closing borders and suspending air and ground traffic; reducing consumption of oil and its main derivative product, gasoline.
The Wuhan coronavirus has, meanwhile, reportedly prompted full or partial closure of almost all major mainland Chinese production facilities and factories. Beijing - a major oil buyer - has halted its purchases of crude, while Chinese authorities tackle the spread of the infection.
OPEC+ Deal Failure
COVID-2019 is not, however, the only reason behind the downturn in energy prices. The oil market began to stutter after the coronavirus epidemic curbed demand in China amid a global economic slowdown.
In a bid to agree to a common approach to reducing oil supply, the Organization of the Petroleum Exporting Countries (OPEC) + alliance met on 6 March to discuss measures, but failed to seal a new deal. The failure prompted Saudi Arabia to boost national oil production, increasing daily deliveries, including those to the domestic market, from 9.7 to 12.3 million barrels, beginning on 1 April.
These developments prompted a significant slump in oil prices that continue to fall.
US Treasury Secretary Steve Mnuchin said earlier on Friday that while lower oil prices hurt the energy sector they give a boost to other industries, including struggling airlines and average households through cheaper gasoline.