World faces new oil crisis
Global share markets plunged on Monday as panicked investors fled to the safety of bonds and the yen to hedge the economic trauma of the coronavirus, while oil plunged more than 30% after Saudi Arabia opened the taps in a price war with Russia.
The cost of futures for Brent crude oil with settlement in May 2020 on the ICE Exchange in London fell by 33.4% to $33.94 per barrel, according to trading data as of 01:08 Moscow time.
By 01:25 Moscow time, Brent partially won back its fall, the price of futures rose to $35.23 per barrel.
The last time the oil price was below $34 per barrel in February 2016.
The cost of the April futures contract for WTI crude oil fell by 27.1% to $32.48 per barrel.
Oil price is falling amid news that OPEC+ countries failed to agree on an additional reduction in oil production amid falling demand due to coronavirus.
At the meeting in Vienna, OPEC proposed to further reduce production by 1.5 million barrels per day until the end of this year. However, Russia and Kazakhstan opposed this proposal. Russia, in particular, insisted on the extension of the current agreements only for the second quarter.
The current transaction will cease to be effective on April 1. After that, all restrictions on oil production in the OPEC and non-OPEC countries will be lifted.
Saudi Arabia said it plans to raise its crude oil production significantly above 10 million barrels per day (bpd) in April.
Goldman Sachs has revised lower its oil price forecast second quarter and third quarter oil to $30 per barrel and has warned its clients about the possibility of dips in prices to operational stress level and well-head costs near $20 per barrel, according to Yahoo finance.