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As OPEC – Russia Fail on Massive Production Cuts, Oil Prices Plunge 9.4%
Recording the Most Daily Drop in More Than 10 Years
07 March 2020
Brent Crude price recorded the highest daily losses in more than 11
years in Friday session as Russia rejected OPEC proposal to make massive
cuts on its oil production to maintain stability in, the previously
harmed, oil prices by the impact of the economic ramifications of the
coronavirus. OPEC responded back by the cancelation of the curbs on its
oil production.
More than one million contracts were traded within the session
simultaneously with the time a pact between Russia and OPEC lasted for
three years was turned to a dispute.
Brent futures recorded the biggest percentage daily drop since December
2008, falling by USD 4.72 (9.4%), to reach USD 45.27 a barrel on
settlement. This is the lowest close for Brent since June 2017.
US West Texas Intermediate crude fell USD 4.62 (10.1%) to reach USD
41.28 a barrel, the lowest close since August 2016 and the biggest daily
loss since November 2014.
More than 4.58 million US crude contracts were traded this week for
closest maturity month which is the most intense week for trading volume
of that contract at all.
Brent and US West Texas crudes fell more than 30% since the start of the
current year.
The number of coronavirus infected people across the world reached a
hundred thousand with the reach of the outbreak of the epidemic to more
countries, accompanied by an increasing harms to the global economy and
more vacant business headquarters and a decline the stock markets.
The disagreement between OPEC and Russia revived the fears of the
collapse in the oil prices that took place in 2014, when Saudi Arabia
and Russia competed on the market shares with the shale oil producers in
the United States who had never been involved in pacts for production
cuts.
OPEC has been urging an additional production cuts of 1.5 million barrel
a day till the end of 2020.
Minister of OPEC said that the independent oil producers will contribute
by 500k barrel a day of the total production cuts. The new agreement was
meant that OPEC production cuts will reach 3.6 million barrel a day, a
3.6% of the total global supplies.