Oil prices plunge more than 20% after OPEC deal failure sparks price war

Oil prices plunged after OPEC’s failure to strike a deal with its allies regarding production cuts caused Saudi Arabia to slash its prices as it reportedly gets set to ramp up production, leading to fears of an all-out price war.

U.S. West Texas Intermediate crude dropped more than 23% to $31.73 per barrel as of 08:35 GMT Monday, having earlier tumbled to a low of $27.34 per barrel. International benchmark Brent crude futures also plummeted 20% to $35.90 per barrel. Brent futures were down more than 30% at their lows.

On Saturday, Saudi Arabia announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.

Goldman cut its second and third quarter Brent forecast to $30 per barrel, and said that prices could dip into the $20s. Saudi Arabia’s price cut followed a breakdown of talks in Vienna last week. On Thursday, OPEC recommended additional production cuts of 1.5 million barrels per day starting in April and extending until the end of the year. But OPEC ally Russia rejected the additional cuts when the 14-member cartel and its allies, known as OPEC+, met on Friday. Oil prices have already moved sharply lower this year as the coronavirus outbreak has led to softer demand for crude. A potential supply glut could pressure prices further.

Oil prices plunge more than 20% after OPEC deal failure sparks price war, CNBC, Mar 9