WASHINGTON: Top US officials have for now put aside a proposal for an alliance with Saudi Arabia to manage the global oil market, according to three sources with knowledge of the matter, an idea one of them said came from White House national security advisers.

That the concept was even considered at high levels reflects both the depth of the crisis facing the global oil industry as well as its growing importance to the US economy. A few weeks ago, proposals for Washington to work together with oil producers to curb supply to the global market would have been dismissed for violating US antitrust laws.

But prices for oil have slumped to an 18-year low because of the twin hits of the coronavirus pandemic slashing energy demand and a price war between top producers Saudi Arabia and Russia, threatening higher-cost U.S. and global drillers with bankruptcy.

The idea of a U.S.-Saudi alternative to the Organization of the Petroleum Exporting Countries, of which Saudi Arabia is the de facto leader, “has been floated but not at the stage of something that is being seriously considered,” said one source.

The two other sources said US Secretary of State Mike Pompeo and Energy Secretary Dan Brouillette discussed the alliance idea with President Donald Trump’s national security adviser Robert O’Brien, but that nothing was decided.

The National Security Council at the White House had asked the Energy Department to draft policy points before the possibility of a US-Saudi alliance on oil was discussed, one source said.

The Wall Street Journal reported in early March that an alliance could involve supporting prices through national reserves, economic stimulus and offering indemnity to Saudi Arabia for oil market moves, points that no officials would confirm.

Published in Dawn, April 1st, 2020