Saudi Arabia declares price war on Russia

The price of Brent crude has fallen to $45 — a record low over the last decade. The reasons are two — coronavirus and Russia.

Саудовская Аравия объявляет ценовую войну России

This reports the analytical portal “Hvilya”.

As it became known on Friday, March 6, Russia and the OPEC countries could not agree about prolongation of the contract on the limitation of oil production.

OPEC countries, especially Saudi Arabia, which now increases oil production, insisted on renewing the agreement before the end of 2020, with additional reduction in daily production by 1,5 million barrels in connection with the decline in world oil demand because of the epidemic of the coronavirus.

It is noted that Russia can withstand oil prices at $42, in contrast to other countries. In order to keep oil prices unchanged OPEC countries need to negotiate with Russia to reduce output by more than 600 thousand barrels per day.

“From the point of view of interests of Russia but this deal just does not make sense. We, yielding to their markets, remove them with cheap Arabian and Russian oil, to make room for the expensive American shale. And to ensure the efficiency of its production”, — said the press-Secretary of “Rosneft” Mikhail Leontyev, informs RBC-Russia.

Saudi Arabia has started a price war with Russia

State company Saudi Arabia Saudi Aramco has offered the highest discount on crude oil over the last 20 years and promises to increase production by more than 2 million barrels a day.

The decision of Riyadh can provoke similar action and other countries of the Persian Gulf.

“The oil market is equivalent to a Declaration of war,” — said the source of Bloomberg.

“Most likely, next quarter we will see the lowest prices on oil over the last 20 years” — analyst IHS Markit Ltd Roger Couch.

In this case, price could fall below $20 per barrel in December 1998, the price of petroleum mix of mark Brent fell to $9,55 for the barrel.