Oil plunged nearly 30% in chaotic market opening, with main crude benchmarks Brent and WTI both trading below $35 a barrel amid fears of an all-out price war following the collapse of an output cut deal between Russian and OPEC.
Asian markets opened with a massive gap on Monday, with Brent falling nearly 30 per cent to $31.38 per barrel within seconds, while WTI dipped below $28 – the lowest since 2016 – before bouncing back slightly.
On Saturday, Saudi Arabia announced a stunning discount of $6 to $8 per barrel to its customers in Asia, Europe and the United States – and said it would boost the oil production despite the global economy slowdown and crude demand drop.
The sudden move was seen as a sign of an all-out oil price war, after a supply cut deal between Russia and the Organisation of the Petroleum Exporting Countries had collapsed.
Wow. Oil prices falls 30% immediately after market opens as Saudi Arabia launches oil price war. Brent crude falls to low of 31.52 a barrel. It traded at $70 as recently as January #OOTT#OPECpic.twitter.com/QJZhRNnlPg
— David Sheppard (@OilSheppard) March 8, 2020
The OPEC and non-OPEC states held the consultations in Vienna on Friday, yet failed to reach an agreement on additinal oil cuts despite concerns over the coronavirus outbreak that created an “unprecedented situation.”
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“From April 1 neither OPEC nor non-OPEC have restrictions,” Russian Energy Minister Alexander Novak told reporters, while Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said: “I will keep you wondering.”
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