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Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears - Business - Nairaland

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Oil Prices Soar As OPEC+ Prepares To Cut Supplies / Oil Price Jumps As OPEC Keeps Output Steady, Hits Four year High / Oil Prices Fall As OPEC Plans To End Cuts – Oilprice Intelligence Report (2) (3) (4)

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Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Kei144(m): 1:12am On Mar 09, 2020
Oil prices plunged 30% in early trading after OPEC’s failure to strike a deal with its allies regarding production cuts caused Saudi Arabia to slash its prices as it reportedly gets set to ramp up production, leading to fears of an all-out price war.

International benchmark Brent crude futures plummeted 30% to $32.05 per barrel. U.S. West Texas Intermediate crude dropped 27% to $30 per barrel, its lowest level since Feb. 22, 2016.

“This has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic overproduction,” Again Capital’s John Kilduff said. “The Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch.”

After the initial drop the losses were pared somewhat, with each contract trading down slightly more than 21%.

On Saturday, Saudi Arabia announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.

“We believe the OPEC and Russia oil price war unequivocally started this weekend when Saudi Arabia aggressively cut the relative price at which it sells its crude by the most in at least 20 years,” Goldman Sachs analyst Damien Courvalin said in a note to clients Sunday. “The prognosis for the oil market is even more dire than in November 2014, when such a price war last started, as it comes to a head with the significant collapse in oil demand due to the coronavirus,” the firm added.

Goldman cut its second and third quarter Brent forecast to $30 per barrel, and said that prices could dip into the $20s.

Saudi Arabia’s price cut followed a breakdown of talks in Vienna last week. On Thursday, OPEC recommended additional production cuts of 1.5 million barrels per day starting in April and extending until the end of the year. But OPEC ally Russia rejected the additional cuts when the 14-member cartel and its allies, known as OPEC+, met on Friday.

The meeting also concluded with no directive about the production cuts that are currently in place but set to expire at the end of the month. This effectively means that nations will soon have free rein over how much they pump.

“As from 1 April we are starting to work without minding the quotas or reductions which were in place earlier,” Russian Energy Minister Alexander Novak told reporters Friday at the OPEC+ meeting in Vienna, adding, “but this does not mean that each country would not monitor and analyze market developments.”

Oil prices have already moved sharply lower this year as the coronavirus outbreak has led to softer demand for crude. A potential supply glut could pressure prices further.

“Both events – coronavirus and OPEC+ falling apart were not expected or priced into the market a month ago,” said Rebecca Babin, senior equity trader for CIBC Private Wealth Management. She said the key things to watch going forward are whether or not Saudi Arabia and Russia reach a “Hail Mary” deal, and if not, how quickly U.S. supply is shut in to support prices.

“There is still significant uncertainty, but the commodity market is not waiting around to find out if miracles can happen,” she added.

The unfolding of events is reminiscent of 2014 when Saudi Arabia, Russia and the U.S. competed for market share in the oil industry. As production escalated, prices plummeted. Some see prices heading back to those lows.

″$20 oil in 2020 is coming,” Ali Khedery, formerly Exxon’s senior Middle East advisor and now CEO of U.S.-based strategy firm Dragoman Ventures, wrote Sunday on Twitter. “Huge geopolitical implications. Timely stimulus for net consumers. Catastrophic for failed/failing petro-kleptocracies Iraq, Iran, etc - may prove existential 1-2 punch when paired with COVID19.”

But others, including Eurasia Group, believe that Saudi Arabia and Russia will eventually come to an agreement.

“The most likely outcome of the failure of the Vienna talks is a limited oil price war before the two sides agree on a new deal,” analysts led by Ayham Kamel said in a note to clients Sunday. The firm puts the chances of an eventual agreement at 60%.

Vital Knowledge founder Adam Crisafulli said Sunday that oil “has become a bigger problem for markets than the coronavirus,” but also said that he does not foresee prices falling to the Jan. 2016 lows.

“Saudi Arabia can’t tolerate an oil depression – the country’s fiscal breakeven oil prices remains very high, Saudi Aramco is now a public company, and MBS’s grip on power isn’t yet absolute. As a result, the [government] won’t be so cavalier in sending oil back into the $30s (or even lower),” he said in a note to clients Sunday.
https://www.cnbc.com/2020/03/08/oil-plummets-30percent-as-opec-deal-failure-sparks-price-war-fears.html

2 Likes 1 Share

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by CXLVII: 4:10am On Mar 09, 2020
Informative threads like this will hardly grace front page.

Just add snake or Regina Daniels to the story and swiftly it will race to front page.

This forum is years behind Quora.

72 Likes 6 Shares

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by sholatech(m): 4:58am On Mar 09, 2020
Well, Nigeria Government will save billions in oil subsidy funds. However, our foreign reserves will be adversely affected.

11 Likes

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by KIDfurniture(m): 6:59am On Mar 09, 2020
Ok ohhh
Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Lilswaggs(m): 6:59am On Mar 09, 2020
God help us oooh

1 Like

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by hisgrace090: 7:00am On Mar 09, 2020
Uniting factor of Nigeria plumetting.

Falls one Nigeria believers will hate this news more than those that have the oil itself.

12 Likes

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by iCauseTrouble: 7:00am On Mar 09, 2020
cool
Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by PureGoldh(m): 7:00am On Mar 09, 2020
Issoryt...Other countries will benefit from this dx but Nigeria have bad eggs on top...they will just swindle everything into their wn purse
Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by SenecaTheYonger: 7:02am On Mar 09, 2020
Oil price fall is good for the US economy but bad for countries like Nigeria whose economy runs on oil export.

29 Likes 2 Shares

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by CtrlA(m): 7:03am On Mar 09, 2020
First page grin

1 Like 1 Share

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by ednut1(m): 7:03am On Mar 09, 2020
Devaluation, recession and hardship loading

20 Likes 2 Shares

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Sunnycliff(m): 7:03am On Mar 09, 2020
Nigeria is in deep poo. We are yet to start borrowing because oil is less than $35 a barrel now. Coronavirus fears and these political tensions of Russia has left so much pain in the oil market.

Fuel pump price should come down to #100 because the price of crude is down. Our government should stop milking us dry.

27 Likes

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Stallion93(m): 7:05am On Mar 09, 2020
Venezuela in Nigeria Loading

4 Likes

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by teamsynergy: 7:05am On Mar 09, 2020
This is not a good news for our oil dependent economy

2 Likes

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by millhouse: 7:06am On Mar 09, 2020
CXLVII:
Informative threads like this will hardly grace front page.

Just add snake or Regina Daniels to the story and swiftly it will race to front page.

This forum is years behind Quora.
grin
Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by idonhammer: 7:07am On Mar 09, 2020
Good news,now fuel will go for 60 naira per a litre

3 Likes

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Enyimbamercedes: 7:07am On Mar 09, 2020
Remind me again what our benchmark for 2020 budget is? $57 per barrel ?

So we are running a deficit budget . Issokay

28 Likes 2 Shares

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by horsepower102: 7:07am On Mar 09, 2020
Great news

It will even go down more.

Soon NNPC will be as useless as NITEL.

Everyone should go and develop their land with their hard work instead of waiting for oil revenue stolen from other people’s land.

21 Likes 2 Shares

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by anonimi: 7:08am On Mar 09, 2020
sholatech:
Well, Nigeria Government will save billions in oil subsidy funds. However, our foreign reserves will be adversely affected.

The people will also save a lot of money from reduced fuel price with our progressive leaders of integrity in government instead of those bloody PDP rogues led by Jonathan cheesy grin


stephenduru:
Minister with the highest portfolio in President Buhari's administration Babatunde Fashola told Federal Government to bring down fuel price on December 7,2014 when there was oil slump.

Politics is a game.Has any minister told Buhari to bring down fuel so far?Mehn!We are suffering.The earlier the better

www.nairaland.com/attachments/3115090_seunoloketuyi1223747310596353674000681876567738n_jpegf23910bd963a3dbb9d74ad4621bdda8b


www.nairaland.com/attachments/6440050_dregaeuxcaaxmzn_jpegbc221e09788124eef1ab789b91afa35e

11 Likes 1 Share

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Nobody: 7:08am On Mar 09, 2020
CXLVII:
Informative threads like this will hardly grace front page.

Just add snake or Regina Daniels to the story and swiftly it will race to front page.

This forum is years behind Quora.
gringrin mods will ban you for saying the truth o.
Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by fiercehillz(m): 7:09am On Mar 09, 2020
Buhari will stabilize the world oil price grin grin grin

6 Likes

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by CanadaOrBust: 7:09am On Mar 09, 2020
CXLVII:
Informative threads like this will hardly grace front page.

Just add snake or Regina Daniels to the story and swiftly it will race to front page.

This forum is years behind Quora.

Well, now that it is on FP can u now apologize to us mods
Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by OakConsultNG: 7:09am On Mar 09, 2020
Interesting times.... Lessons for Nigeria

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Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Sunnycliff(m): 7:11am On Mar 09, 2020
sholatech:
Well, Nigeria Government will save billions in oil subsidy funds. However, our foreign reserves will be adversely affected.

If only our government is sincere but our budget for this year with an oil benchmark price of over $50/barrel will definitely make our budget run in deficit.

1 Like

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Sunnycliff(m): 7:12am On Mar 09, 2020
idonhammer:
Good news,now fuel will go for 60 naira per a litre

Not with this APC government of lies and deciet

10 Likes

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Nobody: 7:12am On Mar 09, 2020
Abeg business intellectuals what does this mean. Na only science stuff I sabi well well.

3 Likes

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by CanadaOrBust: 7:12am On Mar 09, 2020
SenecaTheYonger:
Oil price fall is good for the US economy but bad for countries like Nigeria whose economy runs on oil export.

Ignorance. It is VERY BAD for US economy. US is by far the world’s greatest producer of oil. In fact there are speculations they did this partly to hurt US economy

3 Likes

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Sunnycliff(m): 7:13am On Mar 09, 2020
anonimi:


The people will also save a lot of money from reduced fuel price with our progressive leaders of integrity in government instead of those bloody PDP rogues led by Jonathan cheesy grin





www.nairaland.com/attachments/6440050_dregaeuxcaaxmzn_jpegbc221e09788124eef1ab789b91afa35e

Can Fashola say that again?

11 Likes 1 Share

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by 4Play(m): 7:13am On Mar 09, 2020
If this is sustained, it is likely to prove devastating for Nigeria. For one thing, the forex scarcity we experienced in 2015 to 2017 is about to reemerge with the CBN eventually going to devalue the Naira.

Unlike in 2015, the FG has a much higher stock of foreign debt it needs to service with dollars. We need to brace ourselves for even more economic hardship.

14 Likes 4 Shares

Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by SenecaTheYonger: 7:14am On Mar 09, 2020
CanadaOrBust:


Ignorance.

On your path?
Re: Oil Plummets 30% As OPEC Deal Failure Sparks Price War Fears by Sunnycliff(m): 7:14am On Mar 09, 2020
Ausrichie:
Abeg business intellectuals what does this mean. Na only science stuff I sabi well well.

It means we are in deep poo in our economy because our budget is funded by 50+% of oil revenue.

Our government will have to borrow more in addition to the over #1trn debts we are owing.

5 Likes 1 Share

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