Irresponsible. Say goodbye to OPEC+ and maybe farewell to many shale producers as oil prices crash after Russia decided not to go along with OPEC cuts.
So in an irresponsible move, Saudi Arabia lashed out at Russian insurance going after the customer and cutting oil prices by 6 to 8 dollars a barrel. That set off a parish crash more significant than the biggest crash since the U.S. and coalition allies started dropping bombs in the first Gulf War. The ramifications from this price war go far beyond the energy industry and could cause more significant problems for a struggling global economy.
Saudi Arabia, over the weekend, cut its official selling prices for April for all crude grades to all destinations by between $6 and $8 a barrel, and now it is being reported that Russia Rosneft is cutting production. Russia says it can stand this for at least 6 years to 10 years of sub-par $25.00 barrel.
Market Watch reported that "International Energy Agency on Monday issued a stunning forecast, now projecting oil demand to fall this year on the same day prices collapsed by some 20%. The IEA cut its global oil demand view, now seeing a 90,000 barrel a day decline this year, from a previous forecast of an 825,000 barrels a day increase. "This will be a price war significant casualties as we see the first demand drop since 2009.
The good news is gas prices could crash; we could see drops of 25-50 cents a gallon 238 a gallon so sub-par 2 a gallon. Reports that oil company CEOs are putting halts to projects. Reports show Russia's Ministry of Finance says it will support the ruble, which collapsed overnight, by selling FX from the National Welfare Fund. Reports
Reports show that Saudi Aramco (SE:2222) plunges 10% -- the Riyadh's stock market daily limit -- to 27 riyals, well below the IPO price of 32 riyals. Aramco market cap has fallen now to ~$1.44 trillion, with Apple (NASDAQ:AAPL) (~$1.26 trillion) closing in as the world's top companies as they grapple with a collapse in fuel demand because of the coronavirus, at least six refiners from China to Singapore said they'd nonetheless try to maximize their purchases from the kingdom, storage capacity permitting. State-run Saudi Aramco has started to receive expressions of interest for extra oil, an industry official said separately.