Oil Prices Suffered Biggest Collapse Since 1991

Market oil prices collapsed by 30 percent due to the failure of negotiations between OPEC member countries with Russia and other partners of the organization to further reduce production volumes. After the debacle in the negotiations in the OPEC + on oil production reducing, oil prices suffered the most severe collapse since the Persian Gulf War in 1991. After trading opening in Asia on Monday, March 9, oil prices fell by about 30 percent. In particular, the price of Brent crude oil produced in the North Sea, a few hours after the start of sales, amounted to $ 32.83 per barrel, which is $ 12.44 lower than at the end of the last trading day March 6. The price of the American brand WTI fell by 12.44 dollars reaching 28.84 dollars. Countries’ currencies quotations associated with oil production also decreased. Thus, the Norwegian krone fell by 3 percent, and the Russian ruble by 4 percent - to a minimum for almost four years, Reuters notes. Failure of OPEC + negotiations and the impact of the coronavirus epidemic on the oil market Oil prices collapsed due to unsuccessful negotiations of the Organization of Petroleum Exporting Countries (OPEC) participants on the issue of reducing oil production on March 6 in Vienna. OPEC proposed to the 14 countries included in the association to reduce daily oil production by 1 million barrels in the second quarter of 2020, and 10 partners of the organization, including Russia, to take on another 500 thousand barrels. However, Moscow refused to deepen restrictions. OPEC explained the proposal to further limit oil production by the need to keep oil prices from further declining amid the SARS-CoV-2 coronavirus epidemic, which negatively affects global economic forecasts and oil demand. From April 1, all restrictions on oil production will be lifted After the failure of the negotiations in Vienna, the state-owned oil company Saudi Arabia Aramco said it was going to lower the official price of all grades of oil sale for all buyers, according to Reuters. For buyers in Northwest Europe, as a result, the price of one barrel of oil should drop by $ 8, the agency said. Until the end of March 2020, the agreement on the reduction of oil production by 1.7 million barrels per day continues between OPEC member countries and partners of the organization. Starting April 1, all restrictions on oil production will be lifted.