US President Donald Trump has ordered his secretaries of Energy and the Treasury to devise a financial rescue plan for the American oil and gas industry, as oil prices continue their historic nosedive.
Trump gave the order on Tuesday to “make funds available” to the flailing industry, according to Reuters – a day after the price of US benchmark oil futures contracts sank below zero, an unprecedented drop triggered by rock-bottom demand and excessive supply. The price of Brent crude has also fallen to two-decade lows, dipping below $20 per barrel as of Tuesday.
The president is likely trying to prevent a further decline as the collapsing oil market appears to be dragging the already-languishing stock market down with it. The Dow dropped a full 500 points on Tuesday after the opening bell, and with most of the US economy still shut down due to the pandemic, a recovery is unlikely without some form of government intervention.
Oil drillers are quite simply running out of places to store the commodity, and with most of the world under lockdown, no one wants to buy it until they’ll be able to use it. However, the US shale oil industry was in the red before the coronavirus crisis, and any rescue plan for moribund drillers is likely to be controversial, especially given the continued congressional stalemate on replenishing the bailout fund for small businesses, which ran dry last week.
Still, the US is far from the only nation to be threatened by the declining oil markets. French finance minister Bruno Le Maire warned on Tuesday that the price collapse posed “a danger for the global economy,” already in a weakened state due to the pandemic.
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