Oil prices witnessed historic collapse by almost 30 percent today (Monday) after Saudi Arabia started a price war with Russia by slashing its selling prices and set plans for a dramatic increase in crude production in April.
US oil prices heading for its biggest loss on record as much as 27 percent to a four-year low of $30 a barrel as traders brace for Saudi Arabia to flood the market with crude in a bid to recapture market share.
Prices fell by as much as a third following Saudi Arabia’s move to start a price war after Russia balked at making the further steep output cuts proposed by Organization of the Petroleum Exporting Countries (Opec) to stabilise oil markets hit by worries over the global spread of the coronavirus.
Saudi Arabia is attempting to punish Russia, the world’s second-largest producer, for not supporting the production cuts proposed last week by Opec.
Brent crude 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 at 0114 GMT.
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, Russia, and other major producers last battled for market share like this between 2014 and 2016 to try to squeeze out production from the United States.