With oil prices crashing Monday and the oil war escalating between Russia and Saudi Arabia, President Donald Trump is planning to announce an aid package to help U.S. oil producers caught in the middle, according to a report by Bloomberg News.

The Trump administration is considering a financial aid package to U.S. oil industries impacted by the coronavirus and the oil price crash. The package may include cash injections, tax credits, payroll tax cuts, and tariff reductions on specific Chinese imports, Bloomberg sources familiar with the matter said.

Global oil demand is set to drop this year for the first time since the financial crisis in 2009, the International Energy Agency (IEA) says. The IEA cut its demand outlook by 1.1 million barrels per day (bpd) due to the coronavirus outbreak.

Oil prices fell sharply Monday after OPEC talks fell apart and Saudi Arabia and Russia vowed to increase oil production in a massive oil price war. By Monday afternoon, the WTI Crude grade had fallen 25.02 percent to $30.95 – the largest oil price slide in years, CNBC reports.

Russian President Vladimir Putin said the low levels were acceptable and the super power would continue with its current policy. In a meeting with Russian energy officials, he said, “I want to stress that for the Russian budget, for our economy, the current oil prices level is acceptable.”

In response, Saudi Arabia announced it was reducing its unrefined oil price to Chinese consumers by as much as $6 or $7 per barrel, and was considering increasing its daily unrefined output by as much of as 2 million barrels per day into an already oversupplied international market.

“We, yielding our own markets, remove cheap Arab and Russian oil from them to clear a place for expensive American shale,” Rosneft spokesman Mikhail Leontiev told Russia’s Ria Novosti news agency over the weekend. “And to ensure the efficiency of its production. Our volumes are simply replaced by the volumes of our competitors.”

The IEA’s March report states that, “While the situation remains fluid, we expect global oil demand to fall in 2020 – the first full-year decline in more than a decade – because of the deep contraction in China, which accounted for more than 80 percent of global oil demand growth in 2019, and major disruptions to travel and trade.”

U.S. companies have been squeezed in the middle, some financial analysts note.

U.S. oil companies were hit hard on Monday, with Chevron (-15.37 percent), Occidental (-52.01 percent), Apache (-53.86 percent), Marathon Oil (-46.81 percent), ExxonMobil (-12.22 percent), EOG Resources (-31.98 percent), ConocoPhillips (-24.87 percent), and Pioneer Natural Resource (-36.96 percent), all falling sharply.

What may be a nightmare for oil companies has benefited consumers at the pump. The average gasoline prices in the U.S. are the lowest they’ve been in a year, according to Gas Buddy.

In Texas, for example, regular unleaded gas prices are below $2 a gallon.

According to an impact analysis published by Norway-based energy research firm, Rystad Energy, oil prices will undergo extreme levels of volatility in the coming days and may go even lower than the current $35, depending on the 2 million barrels per day (bpd) surplus in and ongoing war between OPEC and Russia.

“If nobody blinks in this supply war, prices may have to go this low in order to properly reduce production and get supply-demand back in balance,” says Artem Abramov, Rystad Energy’s Head of Shale Research.

“This could turn out to be one of the greatest shocks ever faced by the oil industry, as coronavirus containment measures will add to the headache of producers fighting for market share. And OPEC has clearly stated that it won’t be coming to the rescue in the second quarter of 2020.”

Despite the market fluctuation and corona virus fear, the U.S. remains the largest oil producer in the world. Since 2018 – for the first time since 1973 – the U.S. began producing more oil than both Saudi Arabia and Russia. With Texas at the epicenter of the U.S. shale boom, and ongoing production in the Permian Basin of West Texas, the U.S. Energy Information Agency predicts the U.S. will continue to lead in oil production for some time.

Rystad Energy also projects that the U.S. Gulf of Mexico is positioned for another year of record oil production in 2020.

This article was first published by The Center Square.