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Saudis start oil price war: oil prices plunge 30%! Will it fall below $ 20 / barrel?

Saudis start oil price war: oil prices plunge 30%! Will it fall below $ 20 / barrel?

(Summary description)Last week, after Russia refused to support the Organization of the Petroleum Exporting Countries (OPEC)

Saudis start oil price war: oil prices plunge 30%! Will it fall below $ 20 / barrel?

(Summary description)Last week, after Russia refused to support the Organization of the Petroleum Exporting Countries (OPEC)


(Extracted from China Chemical Industry News Public Account)

    Last week, after Russia refused to support the Organization of the Petroleum Exporting Countries (OPEC) 's proposal to cut output, Saudi Arabia took the initiative to start a price war, and oil prices suffered a historic plunge.

Saudi Arabia starts oil price war

    Last Friday, OPEC + talked with Russia and failed to reach an agreement to further reduce production by 1.5 million barrels per day. On Saturday, Saudi Arabia immediately launched a "comprehensive oil price war":

    The prices of major crude oils at different levels have been significantly reduced, and the reduction is at least the largest in 20 years. This is the first marketing decision announced by Saudi Aramco, Saudi Aramco, following the OPEC + conference.

    The statement file shows:

    April crude oil prices to Asia were lowered by 4-6 US dollars / barrel;

    The price of crude oil sold to the United States in April was reduced by $ 7 / barrel;

    These are unprecedented discounts.

    But the most amazing thing is that the discount on flagship Arab light crude oil sold to Northwest European refiners has been extended to $ 8 / barrel and the price has been as low as $ 10.25 / barrel. In contrast, Russia's flagship Urals crude oil (Urals) is discounted at about $ 2 per barrel.

    Obviously, Saudi Arabia is a Russian oil company that is directly attacking the European market.

    Reuters reported on the 9th that Brent crude futures fell as much as $ 14.25 on the day to $ 31.02 per barrel, a drop of 31.5%. This is the largest decline since the outbreak of the Gulf War on January 17, 1991, and the lowest price since February 12, 2016.

    West Texas Intermediate Crude Oil Futures (WTI) fell by $ 11.28 to $ 30 per barrel, a decrease of 27.4%, also setting the largest percentage decline since the Gulf War and the lowest price since February 22, 2016.

    As of 14:28 on March 9, the decline in WTI crude oil had narrowed to 27%, at 30 US dollars / barrel, and had previously fallen by 33%. Brent crude is now reported at $ 33.67 / barrel.

    The domestic market closed on March 9 during the day. Fuel, asphalt, crude oil, PTA, methanol, and other energy-related varieties of daily limit.

Russia rejects proposal to cut output

    Since the global spread of the Xinguan epidemic, the market is concerned that the demand for crude oil is weak and international oil prices have continued to fall. As the largest oil producer in OPEC, Saudi Arabia has been urging OPEC and Russia's allies to reduce production to support oil prices.

    To this end, the Saudi side issued a statement on Thursday (5th) saying that it would propose to non-OPEC oil producers including Russia to expand the existing 2.1 million barrels per day production reduction agreement by an additional 1.5 million barrels per day. . However, in the OPEC and allies negotiations to expand production in Vienna on the 6th, Russia rejected the proposal and ended in failure.

    On the 7th, Saudi Arabia launched an "oil price war" and lowered its crude oil sales price for April by 6 to 8 dollars. At the same time, the Saudi side also said that it can continue to increase production if needed.

    Saudi Arabia is the world's largest oil exporter. It can produce approximately 9.7 million barrels of oil per day, but its daily output can reach 12 million barrels. CNN cited analysts as saying that the Saudi price cut was aimed at regaining market share and putting more pressure on Russia.




International oil prices may drop to $ 20 per barrel

    Goldman Sachs analysts warned that oil prices could fall further to $ 20 a barrel.

    Goldman Sachs analysts said in the report that the price of Brent crude could drop to as low as $ 20 a barrel, which will test some oil producers.

    Goldman Sachs said that the price war completely changed the outlook for the oil and gas market, and Goldman Sachs cut its oil price forecast for the second and third quarters to $ 30 per barrel.

    "We think OPEC's oil price war with Russia has undoubtedly started this weekend," Goldman Sachs analysts said. "The prognosis for the oil market is even worse than when the last price war started in November 2014, because the coronavirus epidemic caused a sharp drop in oil demand."

    Brent crude has fallen about one-third this year, falling to its lowest level since 2017 at $ 45 a barrel.

    As the outbreak restrained corporate activities, resulting in stagnation in travel and the global economy in trouble, countries that depend on oil revenue and many oil companies were under heavy pressure.

    Two sources told Reuters on Sunday that Saudi Arabia, the world's largest oil exporter, plans to sharply increase oil production to more than 10 million barrels per day in April.

    Sources familiar with the matter said that Saudi Arabia and the United States will increase production after the OPEC and Russia's OPEC + production reduction plans expire at the end of March.

    Sources said that the output in April will be much higher than 10 million barrels per day and may be close to 11 million barrels per day. Over the past few months, Saudi output has remained at 9.7 million barrels per day.

    Sources said Saudi Aramco should maximize production and increase crude oil sales to protect its market share.

    Saudi Arabia's production capacity of 12 million barrels per day gives it the ability to rapidly increase production.

    Other OPEC oil-producing nations, such as Iraq, Kuwait and the UAE, may follow in the lead of Saudi Arabia and significantly reduce the price of oil in April.

    "You have to lower the official selling price (OSP), or you will be killed in the market," said an industry source in OPEC oil-producing countries.

    At the same time, the sharp drop in oil prices will hurt oil producers around the world, especially Venezuela and Iran, two oil-based economies that are already under pressure from US sanctions.

    The New York Times said that if oil prices continue to plummet, indebted American oil companies will also face greater financial pressure.

    In recent years, dozens of U.S. oil companies have gone bankrupt, and U.S. oil production may also decline. Oil companies have been laying off workers in Texas and other oil-producing states. (Extracted from China Chemical Industry News Public Account)

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