Adedapo Adesanya
By Adedapo Adesanya
Oil prices dropped on Monday after an emergency meeting called by the Organisation of the Petroleum Exporting Countries (OPEC) and allies, OPEC+, failed to hold yesterday after a rift ensued between leaders of both groups, Saudi Arabia and Russia, leading to a postponement of the talks to Thursday, April 9.
On Monday night, the Brent crude depreciated by 3.11 percent or $1.06 to $33.05 per barrel, while the West Texas Intermediate (WTI) crude fell by 1.96 percent or 51 cents to $26.59 per barrel.
Both Saudi Arabia and Russia had been involved in a price war after both disagree on a production cut deal last month. The proposed production ceiling was to help prices to remain up at a period when demand has fallen due to the coronavirus pandemic, which has put restrictions on movements.
Last week, the United States intervened in the matter and asked for a stalemate and this resulted in the call for the emergency meeting between both countries and other oil producers.
Saudi Arabia, Russia, and many other oil producers all over the world were set to meet virtually on Monday to discuss ways of supporting collapsing oil prices by potentially cutting 10 million or even 15 million barrels per day of global oil production.
However, Saudi Arabia and Russia traded accusations over the weekend with one claiming that the other was the reason the OPEC+ pact collapsed last month.
President Vladimir Putin of Russia had said that Saudi Arabia’s oil price war, which offered discounts for its oil grades, was targeted to bankrupt US shale, while Saudi Arabia responded by accusing Russia of breaking up the OPEC+ coalition last month.
Meanwhile, both Saudi Arabia and Russia signalled that while they are ready to talk potential production cut, they would only consider it if major producers from outside the OPEC+ format, including the United States, are part of the output cap.
Due to the delay in the meeting yesterday, traders sold off of the commodity in low prices on Monday, pushing down some of gains recorded last week.
On Monday, reports reaffirmed that Russia was ready to reduce its production very substantially to help the oil markets, and following its refusal to agree to cuts last month, this might help prices up ahead of Thursday’s meeting when a decision will be taken.
