Market Overview

Oil Drops More Than 26%, Aramco Drops To The Lowest Price As Saudi Arabia, Russia Engage In Price War

Share:
Oil Drops More Than 26%, Aramco Drops To The Lowest Price As Saudi Arabia, Russia Engage In Price War

Crude oil futures on Sunday dropped by the most percentage points since the gulf war of 1991, as Saudi Arabia and Russia engaged in a price war.

What Happened

Saudi Arabia announced that it is cutting the price for April crude oil to all destinations by $6 to $8, as reported by Reuters, causing the oil prices to crash to their worst since early 2016.

The move followed Russia's denial to cooperate with the Organization of Petroleum Exporting Countries' decision to slash oil supply in the wake of reduced demand due to the novel coronavirus (COVID-19) outbreak.

Russia isn't a member of the OPEC group but is one of the key allied members, called OPEC+ countries.

Instead of cutting oil supply, Saudi Arabia went the other way to outdo Russia, offering a significant discount on the April oil prices.

"Saudi Arabia and Russia are entering into an oil price war that is likely to be limited and tactical," Eurasia Group noted, per Reuters.

"The most likely outcome of this crisis is entrenchment into a painful process that lasts several weeks or months, until prices are low enough to ... some form of compromise on resumed OPEC+ production restraint," it said.

Price Action

Brent Oil futures traded 26.5% lower at $33.28 at press time late Sunday. West Texas Intermediate crude futures dropped 27.57% at $29.88.

Both oil benchmarks dropped below 30% in the day, their biggest single-day drop since the gulf-war of 1991.

The Saudi Arabian Oil Company, or Saudi Aramco, also suffered the outcomes from the price cut, dropping to its lowest price since the IPO at $7.99.

 

Related Articles

View Comments and Join the Discussion!

Posted-In: Brent Oil Crude OilNews Commodities IPOs Global Markets General Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com