The price of crude oil fell by almost 30% on Monday. The most since 1991 after Saudi Arabia started a price war with Russia by slashing its selling prices and pledging to unleash its pent-up supply onto a market reeling from falling demand because of the coronavirus outbreak.
The world’s top oil exporter plans to raise its crude oil production significantly above 10 million barrels per day (BPD) starting in April, after the end of the OPEC supply cut agreement with Russia.
Brent crude oil futures fell by as much as $14.25, or 31.5%, to $31.02 a barrel. That was the biggest percentage drop since January 17, 1991, at the start of the first Gulf War and the lowest since February 12, 2016. It was trading at $35.75 in the early hours of the morning.
From OPEC-plus to OPEC-minus. The oil price war erupts as the #coronavirus upends Saudi-Russia pact. Richard Mably, #Refinitiv shares his thoughts: https://t.co/kooQAVUbvS #TrustedData #SmarterTrading pic.twitter.com/yjFdLbARVW
— Refinitiv (@Refinitiv) March 9, 2020
US West Texas Intermediate crude fell by as much as $11.28, or 27.4%, to $30 a barrel. That was also the biggest percentage drop since the first Gulf War in January 1991 and the lowest since February 22, 2016. It was trading at $32.61.
Saudi Arabia, the world’s biggest oil exporter, is attempting to punish Russia, the world’s second-largest producer, for failing to agree on new ‘supply cut targets’ on Friday at production cuts proposed by the Organisation of the Petroleum Exporting Countries (OPEC). The supply cut agreement with Russia is due to expire in March, there is no new deal.