Crude oil prices see double whammy from Covid-19, Opec+ spat; likely to stay low ahead

SINGAPORE (March 13): Crude oil prices have already taken a blow since the start of 2020. The out­break of the novel coronavirus or Cov­id-19 did not only infect more than 119,000 and kill more than 4,000, but also impeded economic activity. This led to ex­pectations of lower oil demand going forward.

Then came the second blow last weekend. Russia — one of the world’s largest oil produc­ing countries — snubbed Saudi Arabia’s pro­posal to collectively cut oil production in view of weak demand. Both countries were in Vien­na, participating in a meeting that comprised members of the Organization of the Petrole­um Exporting Countries (Opec) and certain non-Opec countries — which are collectively known as Opec+.

Following the collapse in talks, Saudi made an unexpected announcement. The Kingdom slashed its official selling price (OSP) by US$7– 8 per barrel ($9.74–$11.13 per barrel) to Eu­rope and the US and US$4–6 barrels to Asia. It is also reportedly planning to increase exports by up to 800,000 barrels a day (bpd) into an already over-supplied market.

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