Oil plunges 30%, Biggest Since Gulf War, as Saudi Cuts Price After Failed OPEC Deal

Crude oil prices tanked over 30 per cent in Monday’s trade after Saudi Arabia slashed prices and set plans for a big increase in crude production in April.

New Delhi| Oil prices plunged around 25% on Monday, heading towards their biggest daily loss since 1991 after Saudi Arabia slashed prices and set plans for a big increase in crude production in April.

Prices fell as much as 31% following the Saudi move to start a price war after Russia balked at making the further steep output cuts proposed by OPEC to stabilize oil markets hit by worries over the global spread of the coronavirus.

Saudi Arabia plans to boost its crude output above 10 million barrels per day (BPD) in April after the current deal to curb production expires at the end of March, sources told Reuters. The world’s biggest oil exporter is attempting to punish Russia, the world’s second-largest producer, for not supporting the production cuts proposed last week by the Organisation of the Petroleum Exporting Countries (OPEC).

Brent crude futures were down $11.31, or 25%, at $33.96 a barrel by 0319 GMT, after earlier dropping to $31.02, their lowest since Feb. 12, 2016. Brent futures are on track for their biggest daily decline since Jan. 17, 1991, at the start of the first Gulf War.

Also Read: Rupee falls 26 paise to 72.76 against US dollar in early trade

Oil marketing companies (OMCs), tyre industry, synthetic fibre producers and businesses, which use derivatives like paints, producers of lubricants, transformer oils, plastic products, soaps and detergents, etc as core inputs are likely to gain with the falling crude oil prices.

Shares of oil marketing companies including Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) advanced up to 9 per cent in Monday’s morning trade.

Saudi Arabia has opened the war by cutting its official selling prices for April for all crude grades to all destinations by between $6 and $8 a barrel.

China’s efforts to curtail the coronavirus outbreak has disrupted the world’s second-largest economy and curtailed shipments to the largest oil importer.

In other markets, the dollar was down sharply against the yen, Asian stock markets were set for big falls and gold rose to the highest since 2013 as investors fled to safe havens.

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