On the 5th and 6th March, the OPEC countries met to discuss the recent crash of the oil price. Unfortunately the meeting was not as positive as hoped and today the oil prices recorded an huge downward in the Asian market. This morning at the reopening of the Stock Exchanges the WTI oil price recorded a fall of -33,16% to 27.59 $ pb, whilst the Brent Crude Price fell 30% to 31.54 pb.
This follows recent events, which sees a huge fall of the last five years.
On the 5th March the member countries of OPEC, guided by the Saudi Arabia, presented the proposal of cutting oil supply by 1,5 million bpd, with the aim to maintain a steady oil price.
The 6th March, Russia, which is one of the OPEC allies but not recognized as a country member of the organization, refused the deal proposed the day before, opening the dispute with the Saudi Arabia. The Russia government refused every form of production cuts and through a delegate at the meeting, the minister A. Novak, announced that starting from the 1st April the Russia will continue production without paying attention to the 2018 limitations. These limitations, set in November 2018 about the number of available barrels per day, will expire at the end of this month.
From Saudi Arabia’s point of view, its government decided to increase production and as consequence market availability. The country will be able to decrease the oil sale price in order to produce a record of 12,5 million barrels per day, compared to the current record of 9.7bpd.
The meeting didn’t meet expectations and in the current global confusion and health emergency, the experts confirm that we are probably also at the beginning of a price war.
Written by Nicolas Spirito.