Brent, WTI Futures Drop 20% Over Saudi Arabia-Russia Oil Price War Fears

Oil prices plunged more than 20% in chaotic market opening, with main crude benchmarks, Brent and WTI, trading below $35 a barrel amid fears of an all-out price war following the collapse of the OPEC output cut deal.

Asian markets opened with a massive gap on Monday, with Brent within seconds falling nearly 30 per cent to $32.05 per barrel, while WTI fell some 27 per cent to around $30 – the lowest since 2016 – before bouncing back slightly, to $35.3 and $32 respectively.

On Saturday, Saudi Arabia announced a stunning discount of $6 to $8 per barrel to its customers in Asia, the United States and Europe – and said it would boost the oil production despite the global economy slowdown and demand drop. 

The sudden move was seen as a sign of an all-out oil price war, after supply cut deal between Russia and other countries with the Organisation of the Petroleum Exporting Countries had collapsed.

The OPEC and non-OPEC states held the consultations in Vienna on Friday, yet failed to reach an agreement on oil cuts despite concerns over the coronavirus outbreak that created an “unprecedented situation.”

“From April 1 neither OPEC nor non-OPEC have restrictions,” Russian Energy Minister Alexander Novak told reporters, while Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said: “I will keep you wondering.”