Crude oil prices started the week’s transactions with a sharp decline of more than 30 per cent, after the producers ’agreement in OPEC and outside it stumbled on the continuation of the plan to reduce the oil supply and Russia’s insistence to return to previous production levels, which prompted OPEC to take similar action. .
The losses were exacerbated in light of data confirming the continued decline in demand due to the widespread and destructive spread of the Corona virus, and the global economic slowdown, while analysts monitored competition for market shares, which were shrinked due to the weakening of Chinese demand in particular, in exchange for increasing the supply in the markets.
Oil specialists and analysts say that Russia's decision to exit the production-reduction agreement raised tension and anxiety in the already heavily burdened markets due to the spread of the Coruna virus and the entry of the global economy to the slowdown and stagnation tunnel.
Specialists expected that the Russian decision will lead to increased volatility and lack of stability in the markets, as the American oil companies are likely to be the biggest victims due to falling prices, worsening demand problems and increased competition for markets that have become limited in growth.
In this context, Robert Stihrer, Director of the Vienna International Institute for Economic Studies, told the "Economist" that the start of the week on losses reflects the scale of the ordeal that the market is going through, after OPEC producers were preparing to make deeper cuts by about 1.5 million barrels per day to absorb Corona's shock on the world oil market, before Russia breached the agreement.
He added that Russia defended its interest in isolation from the rest of the interest of producers, which contradicts the concept of partnership and cooperation that was established in 2016 and established the principle of joint responsibility and the interest of the global economy in general.
For this part, Rudolf Hopper, an economist and director of one of the specialized sites, told to "Al-Eqtisadiya" that crude oil prices have already entered a downward spiral of pressure since the global financial crisis in 2008, which led some analysts to expect the price of a barrel to fall to $ 20 during the year.
He explained that Russian-American conflicts cannot be ignored as a background to the new Russian position, which was a shocking shift in the path of producer cooperation, as the Russian move is most likely aimed at confronting shale oil producers in the United States and responding to the United States that is blocking the gas pipeline. Nord Stream 2, which connects Russia and Germany.
For this part, Andrei Yaniyev, a Bulgarian analyst and researcher in energy affairs, stated to the Economist that Saudi Arabia has the right to amend its export policies after the collective work of producers faltered in light of the recent Russian position, pointing out that Saudi Arabia has always borne the greatest burden and made voluntary cuts and urged other producers Committed to reaching a balanced and stable market, I was surprised by this unjustified shift.
Naila Hnjstler a Director of the Middle East Department and Africa in the Austrian Federal Chamber, said that the market is already undergoing one of the worst price declines in history, particularly since the global financial crisis pushed oil prices to the lowest level in four years under a state of uncertainty about put the economy as a result of the global spread of the virus and open taps producers at full capacity starting April first.
She pointed to the decline in prices, which will have broad repercussions and may lead to the production of shale oil producers out of the competition arena completely, despite the extensive efforts they made in the past years to raise efficiency and reduce operating costs.
With regard to prices, it fell by about a third after Russia refused to implement another major production cut proposed by "OPEC" to stabilize crude markets, which were affected by fears of the economic impact of the Corona virus.
By 05:52 GMT, Brent crude futures fell 27 per cent, equivalent to $ 12.23 to $ 33.04 a barrel, after falling earlier to $ 31.02 a barrel, the lowest level since February 12, 2016. And Brent crude futures It is on track for its biggest daily drop since January 17, 1991.
US West Texas Intermediate crude fell 29 percent, or $ 11.88 to $ 29.40 a barrel, after touching a level of $ 27.34, which is also the lowest level since February 12, 2016. American crude is likely heading to the lowest level ever, exceeding a decline of 33 Percent in January 1991.
The disintegration of the group known as "OPEC +", which includes "OPEC" in addition to independent producers including Russia, ends cooperation that has lasted for more than three years to support the market, and to achieve price stability in recent times in light of the threat from the economic impact caused by a virus outbreak Corona.
On the other hand, the OPEC crude basket declined and its price hit 48.33 dollars a barrel on Friday, compared to 51.74 dollars a barrel the day before.
The daily report of the Organization of Petroleum Exporting Countries (OPEC) said yesterday that the price of the basket, which includes the average prices of 14 crude from the production of member countries in the organization, achieved its third consecutive decline and that the basket lost about two dollars compared to the last transactions in the month of February, which recorded It has $ 50.16 a barrel.