Oil prices started Monday with a decline of more than 10% after investors lost optimism over the weekend about the possibility of a deal by Russia, Saudi Arabia, and the United States to reduce global production by about 10%.
By 8: 11 am GMT, Brent futures on the London ICE Futures exchange were down $0.64 (1.88%) to close at $33.47 per barrel on Friday. At the end of trading on April 3, the price of the June contract for Brent soared by $4.17 (13.93%) to $34.11 per barrel.
WTI futures fell by this time in New York by $0.97 (3.42%) to $27.37 per barrel. On Friday, May WTI futures jumped $3.02 (11.93%) to $28.34 per barrel.
OPEC and other oil-producing countries postponed a conference call to discuss steps to stabilize the oil market from Monday, April 6, to April 9, which the market took as a bad sign.
At the same time, Moscow and Riyadh exchanged mutual accusations as to which of them is responsible for the collapse of the OPEC+ deal in early March. Russian President Vladimir Putin’s words that Saudi Arabia withdrew from the OPEC + agreement and increased production while offering discounts to the market to get rid of shale oil production are far from the truth, said on Saturday the Kingdom’s Foreign Minister, Prince Faisal bin Farhan bin Abdullah.
“I don’t see how an agreement can be reached against the backdrop of the war of words that has now begun,” a Saudi official told the Wall Street Journal, commenting on the prospects for the meeting.
At the same time, in anticipation of the meeting on Sunday, Riyadh postponed the announcement of prices for buyers until next month.
Russia and Saudi Arabia make it clear that they are not ready to make cuts if the US does not join them. However, following the results of Friday’s meeting of President Donald Trump with the heads of American oil companies, there were no encouraging signals about this. “We have a free market. In the end, the market will solve the problem, ” Trump said.
“We have always been skeptical about the possibility of a broader deal involving the US since us producers cannot be forced to reduce production,” said Bloomberg analyst Energy Aspects Ltd. Amrita Sen.
Moreover, Washington hints at the possibility of imposing duties on oil imports if Saudi Arabia and Russia do not stop the price war. Experts at Clearview Energy Partners believe that at the OPEC+ meeting on Thursday, the US will make threats rather than proposals about reducing production by American producers.
The demand for oil has now fallen sharply in the world due to quarantine measures. For example, analysts at Goldman Sachs estimated last week this drop at 26 million barrels per day or about 25% of global demand. In the future, according to various estimates, the reduction may reach 30%. At the same time, 70% of the world’s oil storage facilities are already full, data from The Wall Street Journal shows.