By Adedapo Adesanya
Brent Crude tumbled by 2.44 percent or 70 cents to $27.95 per barrel on Friday night after Saudi Arabia said it hasn’t recently held talks with Russia to end the price war that began earlier this month.
This also caused the West Texas Intermediate crude oil to slide by 4.8 percent or $1.09 to $21.51.
Oil prices have crashed more than 30 percent to their lowest level in nearly three years in 2020 following the aftermath of the final meeting between the members of the Organisation of the Petroleum Exporting Countries (OPEC) led by Saudi Arabia and their allies led by Russia, where the latter refused to agree to extra output cuts.
From next month, countries party to that deal will be free to supply without restraint into a market that is showing signs of an oil glut as demand weakens due to the coronavirus.
On Friday, a spokesperson of the Saudi Arabia Energy Ministry said that the two countries have had no discussion of a joint agreement to balance oil markets.
“There have been no contacts between Saudi Arabia and Russia energy ministers over any increase in the number of OPEC+ countries, nor any discussion of a joint agreement to balance the oil markets,” Saudi state-run news agency SPA quoted an oil ministry spokesman as saying.
Saudi Arabia, Russia and other oil producers, including Nigeria, have since started making plans to battle for market share, just as the coronavirus pandemic has crushed demand for the black gold.
Saudi Arabia has said it will supply its customers with 12.3 million barrels per day of crude in April and May, which is 300,000 barrels per day above its maximum sustainable capacity — and it has begun heavily discount of its official formula selling prices up to $10.
Russia could add 200,000 – 300,000 barrels per day within a month, and has the potential for up to 500,000 barrels per day of additional supply in the longer term, while other oil producing states will also add theirs to the mix.
With the COVID-19 and three billion people in lockdown, global oil requirements could drop by 20 percent, International Energy Agency (IEA) head, Mr Fatih Birol said as he called on major producers such as Saudi Arabia to help to stabilise oil markets.
Market analysts see this happening as the kingdom despite its cheap oil, is not getting any buyers as the premise brought about by the outbreak has reduced demand a lot and will continue till with close to 600,000 cases and almost 27,000 deaths.
Dipo Olowookere