Oil prices plummeted and recorded the biggest daily decline in 30 years

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Asmaa Lemnour wrote on Tuesday 10 March 2020 02:14 AM – Oil markets witnessed a historic day after prices fell in a “free fall” manner at the beginning of trading Monday, bringing Brent crude down more than a third of its value, marking the largest daily decline since the Gulf War in 1991.

The sharp losses reflected the challenges facing the oil markets, after the failure of the major producers agreement in OPEC on deepening and extending the reduction of oil production to control the supply, and achieving balance in the markets, which adds to the weak global demand resulting from the outbreak of the Corona virus.

On the supply side, the failure of the OPEC alliance means the return of producers to increase production with the end of the current agreement, which increases the surplus oil in the markets, at a time when the organization saw the need to reduce an additional 1.5 million barrels to achieve balance.

As for the failure of OPEC to reach an agreement, it will add to the total risks facing the oil markets, especially with the disruption of production in China, which is the largest oil importer in the world, and thus the weak global demand for oil.

And the International Energy Agency considered that the weak global demand recorded the first contraction since 2009 and fell by one million barrels per day this year.

So it seems that the oil market is witnessing a rare case of shock from the side of supply and demand at the same time, according to Citibank.

While Goldman Sachs believes that the failure of the OPEC alliance may push Brent crude to drop to levels of $ 20 a barrel.

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On Monday, oil prices in New York suffered heavy losses, amounting to 25 percent, after the price of “West Texas Intermediate” crude closed at $ 31.13 a barrel.

And West Texas Intermediate crude for April delivery closed the trading session on Monday at 31.13 dollars a barrel, down by 10.15 dollars, while Brent crude tumbled minutes before the end of trading by 24 percent, stable at 34.40 dollars a barrel.

Trading on Wall Street was suspended for 15 minutes, on Monday morning, due to the heavy losses caused by the drop in oil prices and the exacerbation of concerns about the emerging Corona virus.

As for the German Stock Exchange, its main index, DAX, fell about 7 percent, affected by the consequences of the Corona virus.

The International Energy Agency, which is based in Paris, indicated that if governments fail to contain the spread of the Corona virus, consumption may decrease by up to 730 thousand barrels per day.

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