Oil prices have suffered their biggest fall since the day in 1991 when American forces launched air strikes on Iraqi troops following their invasion of Kuwait.

Monday's crash spooked markets that were already freaking out about the impact of the coronavirus pandemic on the global economy and demand for oil. Brent crude futures, the global oil benchmark, were down 22%, last trading at $35.45 per barrel. US oil is trading at $33.15 per barrel, a decline of nearly 20%.

Here are five things you need to know:

Why are oil prices crashing?
Saudi Arabia, the world's top exporter, launched a price war over the weekend. The move followed the implosion of an alliance between the OPEC cartel, led by Saudi Arabia, and Russia

The kingdom and Russia came together to form the so-called OPEC+ alliance in 2016 after oil prices plunged to $30 a barrel. Since then, the two leading exporters have orchestrated supply cuts of 2.1 million barrels per day. Saudi Arabia wanted to increase that number to 3.6 million barrels through 2020 to take account of weaker consumption.

But Russian President Vladimir Putin, worried about ceding too much ground to American oil producers, refused to go along with the plan and his energy minister, Alexander Novak on Friday signaled a fierce battle to come for market share when he said countries could produce as much as they please from April 1.

Why did Saudi launch a price war?
Simmering differences over how best to manage global oil markets spilled into the open at a meeting between OPEC and Russia in Vienna on Friday. After Russia said it was ditching the alliance, Saudi Arabia warned it would live to regret the decision, sources who attended the meeting told CNN Business.

Moscow had become tired of cutting production to stabilize prices and felt that the policy of supply restraint gave more room for US shale companies to grow. Mikhail Leontiev, a spokesperson for Russian state oil company Rosneft, described the OPEC+ deal as "masochism."

"By yielding our own markets, we remove cheap Arab and Russian oil to clear a place for expensive US shale oil and ensure the effectiveness of its production," he told Russian state media on Sunday.

America has become the number one oil producer in the world and is expected to pump about 13 million barrels a day in the first quarter of this year.

Over the weekend, Saudi Arabia decided to fight for greater market share by slashing the prices its preferred customers pay by between $4-$7 a barrel. The kingdom is also reportedly planning to lift production to over 10 million barrels a day.

What does coronavirus have to do with all of this?
The coronavirus has undermined energy demand worldwide, but especially in China, which is now the number one importer of crude oil, guzzling roughly 10 million barrels a day.

Factories have been idled and thousands of flights canceled around the world as the coronavirus outbreak that began in Wuhan, China, has become a global pandemic.

The International Energy Agency said Monday that it expects demand will contract this year for the first time since the recession in 2009 that followed the global financial crisis.

Which countries will be hurt the most?
A price war in the face of collapsing demand is not a recipe for oil stability.

It is difficult to see any winners: the major oil producing countries will lose money regardless of the market share they can claw back. Russia claims to be the most insulated to lower prices because its annual budget is based on an average price of roughly $40 a barrel. US sanctions have forced it to become more efficient.

The Gulf countries produce oil at the lowest cost — estimated at $2-$6 a barrel in Saudi Arabia, Kuwait and the United Arab Emirates — but due to high government spending and generous subsidies for citizens, they need a price in the range of $70 a barrel or higher to balance their budgets.

Oil dependent states that have suffered from years of conflict, uprisings or sanctions will pay the heaviest price. Iraq, Iran, Libya and Venezuela all belong in that category. But the United States won't escape either. The shale oil boom has brought with it an economic windfall for some states, and low prices will hurt oil companies.

Will it have an impact on consumers?
Big importing nations such as China, India and Germany could get some much needed relief from falling energy bills.

And consumers benefit in general from lower oil prices and the resulting decline in gas prices at the pump, especially in the United States where retail markets react more directly to supply and demand. Taxes and surcharges make up a higher share of pump prices in Europe, so the effect is less marked.

But any reduction in gas prices will likely be outweighed by the dislocation to the economy caused by the coronavirus led slowdown in global growth.

Then there's the impact this price war will have on US oil producers and energy jobs in states such as Texas, Louisiana, Oklahoma, New Mexico and North Dakota, who have enjoyed a boom over the last decade.

source: https://edition.cnn.com/2020/03/09/business/oil-price-crash-explainer/index.html

One of the reasons why we need to diversify our economy. Things like these affect Nigeria on a different scale because oil is our only hope

Other countries are shifting to renewable energy sources, and we are not even refining our own crude oil yet... Makes me wonder what hope there is for the future generations if the oil price crashes further (or the oil even finish kpata-kpata)


And our leaders are just there, not caring about what the future holds for the nation. SMH

End time unfolding.

Gen gen

I taught Corona is the cause of the crash

Any country that depends on oil go soon hear am.

Ok... Diversify

Naira will crash soon again ..

According to the lady interviewed on Channels TV this morning : "Nigeria has a big problem ahead of her"

And some idiots still want to borrow 22.5 billion dollars.

Tell me if we borrow such amount how on earth, and for how long are we going to pay up?

Purging our generations to eternal servitude.

The price of oil is dwindling, other countries are diversifying but here, we are still talking of Electricity, road rehabilitation, lack of security etc..


By the time this administration is done with us, Even Venezuela go dey use us get hope..

The Nigeria politicians should be the worse hit because that is their looting money. Other Nigerians only read crude oil funds on papers

All this oil price dey always do me somehow because I no dey understand am

Since I was born till now I only hear of revenues from oil. Please what about gas?? Don't we export those? Please somebody should educate me



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Who cares? When you have a stupid government with nothing other than wax in their brains, such developments become skyfall for them.

It means that price of petrol will fall N80 Per litre

This is now the time for President Buhari to fulfil one of his campaign promises.

He said he will stabilise world oil prices, didn't he?

The global economy is crumbling and Russia is very comfortable with that.

Naira would become useless in the coming months.
States and FG would owe salaries.
Crime and looting would be on the increase.
Countries would start stocking in.
Nigeria would soon be a completely failed state.

I see where we are headed and it doesn't bode well.

"By yielding our own markets, we remove cheap Arab and Russian oil to clear a place for expensive US shale oil and ensure the effectiveness of its production," he told Russian state media on Sunday.

America has become the number one oil producer in the world and is expected to pump about 13 million barrels a day in the first quarter of this year.

Over the weekend, Saudi Arabia decided to fight for greater market share by slashing the prices its preferred customers pay by between $4-$7 a barrel. The kingdom is also reportedly planning to lift production to over 10 million barrels a day.

America entered the middle east to control the flow of cheap crude so that their expensive shale oil can be produced. That's why they could fund the arab wars.
The real price of oil is $25 - $30 per barrel.
Obasanjo achieved all he did with $23 - $40 per barrel.
Methink, Nigeria can run on $35 per barrel by reducing cost of governance and decentralizing (removing things from the exclusive list).
Anything over $40 should be strictly for infrastructure based on development plan



But then, commonsense tells me that
Buhari = Badluck

And farmers are being frustrated

What goes down must surely go up vice versa, the plan is for the covid19 to kill atleast 200million people by year end and hurt billionaires along the way. The dooms day believers and climate change scientists are behind this shit!

What impact will this have on the naira to dollar exchange rate?

Make the oil price situation no last reach 2 months oh...


Una go hear am.

Excess crude account dey dem save for this kind thing, Cabal don use am finish.

The value of dollar to naira is about to go up again.

We may be heading to N500 to $1 again.

the world and its cabals.

I expect the comments here to be few and far between.

Nigerian are not as intelligent as they think.

It means WaHaLa and devaluation of the Naira Loading.
Present BUDGET was made on $50 per barrel oil benchmark, and now that's has dropped to ?$30.

This is a call to action for countries that depend on oil revenue to diversify. Our Tourism industry is still untapped talk more of services.



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Chrisus:
What impact will this have on the naira to dollar exchange rate?

It's like asking what will water have on fire.

I want oil to be rendered useless so useless in price since Nigerian leaders refuse to receive sense and are so proud I'll like to see what's left of them