The price of crude per barrel plunged 20% on the European markets and 30% on the Asian markets following the quarterly OPEC meeting in Vienna, reaching its lowest level in eleven years.
Dismissing proposals to slightly cut its oil production during the current global economic downturn sparked by the coronavirus crisis, Saudi Arabia has aggressively forced prices to plummet.
Saudi Arabia is the main player in the Organization of the Petroleum Producing Countries, of which Russia is only an associate member Opec+.
While the Kremlin favoured a cutback in supply, Rosneft adopted the “every man for himself” approach.
Such a drastic plunge directly threatens the financial balance of many oil-producing countries. If maintained for several months, many may find themselves in default of payment.
It poses a direct challenge to Russia’s oil strategy, but even more so to that of the Trump administration.
It seems that Saudi Arabia is threatening to destroy the US shale oil industry to counter US attempts aimed at destabilizing the country.
Houston’s Cera Week, the world’s largest oil conference that was scheduled for Monday, has been canceled.
Some oil companies are more affected than others given their operating costs are.
The hardest hit is BP, whose stock fell by 20%.