Oil prices tanked over 8% on Friday and hit their lowest since mid-2017 after Russia balked at OPEC's proposed steep production cuts to stabilize prices as the coronavirus outbreak slows the global economy and hurts energy demand.
Three years of cooperation between the Organization of the Petroleum Exporting Countries and Russia ended in acrimony after Moscow refused to support deeper oil cuts to reduce a glut and support prices that have swooned during the coronavirus outbreak. OPEC responded by removing all limits on its own production. "This could be the end of the OPEC-Russia alliance," said Phil Flynn, an analyst at Price Futures Group in Chicago. "For the first time in years at the end of March, there could be no quota on OPEC producers."
The split between OPEC and Russia recalled a 2014 oil price crash, when Saudi Arabia and Russia fought for market share with US shale oil producers, which have never participated in output-limiting pacts. Brent futures fell $4.08, or 8.2%, to $45.91 a barrel by 12:22 p.m. EST (1722 GMT), while US West Texas Intermediate crude fell $3.80, or 8.3%, to $42.10 per barrel.
During the session, Brent dropped to $45.28 a barrel, its lowest since June 2017, and WTI to $41.77, its weakest since August 2016.
Both Brent and WTI were on track for their biggest daily percentage declines since 2015, putting both contracts down over 30% so far this year. Brent's premium over WTI has fallen more than 40% over the past two weeks to just $3.28 per barrel, its lowest since March 2018.
OPEC was pushing for an additional 1.5 million barrels per day (bpd) of cuts until the end of 2020.
Comments
Comments are closed.