Oil prices tumbled nearly 25 percent on Monday after Saudi Arabia lowered its official price for selling crude and drew up plans for a significant increase in oil production next month.
(OPEC) and Russia, its main partner within the “OPEC Plus” coalition, failed to reach an understanding on Friday on an additional reduction in crude production in order to put an end to the decline in oil prices to their lowest levels in four years against the backdrop of the spread of the new Corona virus.
OPEC has proposed to Moscow and its nine other partners an additional collective reduction of 1.5 million barrels per day so that the spread of the virus does not undermine what was reached in 2017 to maintain stable prices in a market with surplus production, but Russia refused this.
In response to the Russian position, Saudi Arabia launched a “price war” on Saturday, reducing its oil prices for sale to its lowest level in 20 years, in an attempt to secure a large market share.
The price of a barrel of West Texas crude was $ 30 on Monday morning, and a barrel of Brent was $ 33.
The kingdom reduced the price of selling crude oil for April to Asian customers by about 6 dollars per barrel compared to March and 7 dollars for the United States, and between 6 and 8 dollars for Western Europe and the Mediterranean region, where Russia sells a large part of its oil production.
Since the beginning of 2017, OPEC Plus countries have pledged to reduce supplies in the market by an average of 1.2 million barrels per day in order to raise prices. In December, the cartel increased the number by 500,000 barrels per day.
But new, tougher measures are necessary, as oil revenues suffer especially from a rapid slowdown imposed by the Covid-19 epidemic on the Chinese economy, the world’s first oil importer.