Oil Prices Crash as Saudis Slash Selling Price and Flood Market
Oil prices plummeted on Monday after Saudi Arabia launched an all-out price war to protect its market share by slashing the official selling price for April crude deliveries by US$6 to $8 per barrel. The Saudi move was in retaliation to Russia’s refusal to cooperate with OPEC on further production cuts to bolster oil prices in the aftermath of the Covid-19 pandemic and its adverse impact on global oil demand.
Brent crude futures crashed to a 4-year low and were trading below US$33 per barrel on Monday, having plunged almost 30% since Friday, while WTI futures dropped to below US$29 per barrel for the first time since January 2016.
Russia’s refusal to align with other OPEC and other producers to cut a further 500,000 barrels per day of production is also likely to have deeper global economic repercussions, especially for politically fragile producer nations such as Venezuela and Iran, as well high-cost shale and heavy oil producers in North America.