A nearly 25 percent drop in oil prices sparked panic-led sales and sharp losses of major US equity indices, as fears of a global recession deepened amid the rapid spread of the Corona virus.
Both Saudi Arabia and Russia said they would increase production early next week, after a three-year agreement between them and other major oil producers collapsed on Friday to curb supply.
Moscow has refused to support the Organization of the Petroleum Exporting Countries in deepening oil production cuts to cope with the massive decline in demand caused by the impact of the Corona virus on travel and economic activity.
Brent crude futures fell $ 10.91, or 24.1 percent, to settle the settlement price at $ 34.36 a barrel. The contract fell as much as 31 percent earlier on Monday to $ 31.02, its lowest since February 12, 2016.
And US West Texas Intermediate crude fell $ 10.15, or 24.6 percent, to close at $ 31.13 a barrel. Crude earlier fell 33 percent to $ 27.34, the lowest level since February 12, 2016.
On Monday, it witnessed the largest single session decline in the percentage of both benchmarks since January 17, 1991, when prices fell by a third at the start of the Gulf War.
Volumes for the nearest month in both decades were at record highs.
Sharp losses included the name of the energy companies, while shale oil producers began cutting spending in anticipation of falling revenues. Exxon Mobil and Chevron shares fell ten percent and about 13 percent, respectively.
“Over the weekend, every company has revised their numbers and shale oil, which will mainly go into a survival mode in terms of capital spending and activity,” said Dan Yergen, vice president of IHS Market.