Oil’s record drop could spark new global price war
Global oil prices crashed 31.5% on Monday to touch $31.02 a barrel, the biggest single-day drop since the Gulf crisis of 1991. The fall, triggered by Saudi Arabia threatening to raise production in its spat with Russia, could turn more precipitous. Mint takes a look.
Why are global oil prices so low now?
The spread of Covid-19 around the world has hurt demand for oil, especially from China, the world’s biggest importer of the commodity. Prolonged supply disruption could keep oil prices subdued. The Organization of the Petroleum Exporting Countries (Opec), Russia and allies met on Monday to discuss a reduction in supplies to stem further erosion in prices. The talks fell through as Russia decided to increase its oil supply, targeting the US shale gas industry. In response, Saudi Arabia, an ally of the US, also decided to raise its supply of oil while offering significant discounts to buyers.
