Oil prices fell by as much as 30 percent today as Saudi Arabia slashed its official selling prices and set plans for a dramatic increase in crude production next month, starting a price war even as spread of the coronavirus erodes global demand growth, Reuters has reported.
Saudi Arabia’s move came after Russia opposed a proposal by the Organization of Petroleum Exporting Countries (OPEC) to cut oil production to stabilise oil markets hit by jitters over the economic impact of the coronavirus epidemic.
According to oil price website, Saudi Arabia – which is the world’s second-largest oil producing country – is reportedly looking to increase its daily unrefined output by as much of as 2 million barrels per day into an increasingly oversupplied international market.
Following Saudi’s shock move, Brent crude futures were down 27 percent at USD33.4 cents a barrel by 0552 GMT, after earlier dropping to 31 dollars and 2 cents, their lowest since Feb. 12, 2016.
According to Reuters, Brent futures are on track for their biggest daily decline since Jan. 17, 1991, at the start of the first gulf war.
The United States. West Texas Intermediate (WTI) crude fell by 29 percent to USD29.40 a barrel, after touching USD27.34, also the lowest since Feb. 12, 2016.
The US benchmark was potentially heading for its biggest decline on record, surpassing a 33percent fall in January 1991.
Some oil analysts are now anticipating barrel prices as low as 20 us dollars within the year.
According to the Central Bank of Kenya (CBK), international oil prices stabilized during the week reflecting a build-up of inventories and proposed cuts in oil production by OPEC.
Murban oil, which is the crude oil that Kenya derives its petroleum products from, traded at USD52.76 per barrel on March 5 compared to USD52.59 per barrel on February 27.
