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On March 8, 2020, Saudi Arabia launched a price war with Russia, which allows for a quarterly drop of 65% in the price of oil. [1] In the first weeks of March, US oil prices fell by 34%, crude oil by 26% and Brent oil by 24%. [2] [3] The price fight was triggered by a breakdown in dialogue between the Organization of the Petroleum Exporting Countries (OPEC) and Russia over planned oil production cuts amid the COVID-19 pandemic. [1] Russia left the agreement, which led to the fall of the OPEC+ alliance. Oil prices had already fallen by 30% since the beginning of the year due to a drop in demand. [4] The struggle for prices is one of the main causes and effects of the global stock market crash that followed. [5] The latest news about the effectiveness of vaccines in fighting the coronavirus, which has pushed oil prices to their highest level since falling in April, has likely made it harder to get a deal. In response to these higher prices, some oil producers saw less need to keep inventories running out of water and wanted to increase pumping in an attempt to offset nearly a year with sluggish oil revenues. However, there has not yet been agreement on the need to hold an OPEC+ implementation policy meeting on Thursday, with the main obstacle being dealing with countries that have failed to reduce the supply needed under the existing pact, the sources said. As a result of the COVID-19 pandemic, plant production and transportation demand have fallen, which has also led to a decline in overall oil demand and lower oil prices.
[14] On February 15, 2020, the International Energy Agency forecast that demand growth would fall to its lowest level since 2011, with growth decreasing by 325,000 barrels per day over the full year to 825,000 barrels per day and a drop in consumption of 435,000 barrels per day in the first quarter. [15] Although global demand for oil has declined, a drop in demand in Chinese markets, the largest since 2008, triggered an OPEC summit in Vienna on March 5, 2020. At the summit, OPEC agreed to further cut oil production by 1.5 million barrels per day by the second quarter of the year (an overall production cut of 3.6 million barrels per day compared to the original 2016 agreement), with the group due to review the policy on June 9 at its next meeting. [16] OPEC has asked Russia and other non-OPEC+ countries to comply with the OPEC decision. [13] On March 6, 27, 2020, Russia rejected this request, marking the end of the unofficial partnership, with oil prices falling 10% after the announcement. [17] [18] Later, on April 3, Saudi foreign and energy ministers issued statements criticizing Putin and accusing Russia of not participating in the OPEC+ deal. [38] Under the agreement, members of the Organization of the Petroleum Exporting Countries, as well as Russia and other countries, will increase production by 500,000 barrels per day in January and possibly by a similar amount in the following months. . . .