Oil wilts to $31 on Saudi price war salvo, negative IEA demand outlook
NEW DELHI: International benchmark Brent wilted to $31/barrel — the lowest since the 1991 Gulf War but later recovered some ground to trade at $36.45 — under the impact of Saudi Arabia’s first salvo in its oil price war with Russia and a negative demand outlook from the International Energy Agency (IEA).
Monday was the first trading day after Saudi-led OPEC and Russia, its ally since 2016 in propping up prices, parted ways on Friday over the former’s proposal to deepen the current production cut to 3.6 million barrels per day (bpd), or 3.6% of the current daily global supply. Riyadh hit back with deep price discounts of $6-8/barrel and announced intentions to pump up volumes to flood an already over-supplied market amid faltering demand due to economic impact of the coronavirus outbreak.
The oil market was further spooked by the IEA’s monthly outlook for March, which was prepared before Riyadh and Moscow split, saying demand will fall this year for the first time since the global financial crisis of 2009 as the coronavirus outbreak slows down economic activities in more and more countries.
