Oil prices crashed in Asia as producers start price war

Oil prices crashed in Asia as producers start price war
An oil production and storage vessel in the Atlantic Ocean. Source: Getty Images
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Daily US Times: Oil prices crashed in Asia by around 30% and started to impact the stock markets what analysts are calling the start of a price war.

This started when major oil producer Saudi Arabia slashed its oil prices at the weekend after it failed to convince Russia on Friday to back sharp production cuts.

Russia and oil cartel Opec previously worked together on production cuts.

The oil prices have tumbled since Friday when Opec’s 14 members led by Saudi Arabia met with its allies Russia and other non-Opec members.

They met to discuss how to respond to falling demand of oil because of coronavirus outbreak around the world, but the two sides failed to come on a agreement to cut production by as much as 1.5 million barrels a day.

The benchmark Brent oil futures plunged to a low of $31.02 a barrel on Monday, in volatile energy markets.

Oil analyst Martjin Rats of Morgan Stanley said Opec members are now expected to pump more oil to capture market share, with global oil production now far outpacing demand.

Mr Rats said in a research note that Opec countries now have very little incentive to restrain production, oil markets look sharply oversupplied.

Oil markets have seen such a situation last time in January 2916.

After the meeting between Opec and Russia failed, it shocked the markets. Russia was surpassed last year by the US as the world’s top producer.

“The collapse of the Opec/non-Opec alliance is a major shock to the oil market, and it comes with the added challenge that we don’t have the full picture of what lies ahead,” said Energy analyst Vandana Hari, of research firm Vanda Insights.