2020 Russia–Saudi Arabia oil price war
[1] The price war was triggered by a break-up in dialogue between the Organization of the Petroleum Exporting Countries (OPEC) and Russia over proposed oil-production cuts in the midst of the COVID-19 pandemic.
In September 2016, Saudi Arabia and Russia agreed to cooperate in managing the price of oil, creating an informal alliance of OPEC and non-OPEC producers that was dubbed "OPEC+."
[citation needed] During the negotiations, Russian officials have argued that it was too early for cuts before understanding the full impact the virus outbreak has on oil prices, and that an existing shortfall of about one million barrels a day, caused by the political turmoil in Libya, was helping to offset a slump in demand at the time.
[19] Pavel Sorokin from the Russian Ministry of Energy doubted that the cuts would work with stating following quotes: "We cannot fight a falling demand situation when there is no clarity about where the bottom is."
[20] On 8 March 2020, Saudi Arabia announced unexpected price discounts of $8 to $6 per barrel to customers in Europe, Asia, and the United States.
On 9 March 2020, stock markets worldwide reported major losses thanks in part to a combination of price war and fears over the coronavirus pandemic.
On 2 April, U.S. President Donald Trump, after significant internal pressure, called Saudi Arabian crown prince Mohammed bin Salman, threatening to withdraw U.S. military support if OPEC and its allies did not cut oil production.
[31] The following day, Russian President Vladimir Putin ordered energy minister Alexander Novak to prepare an extraordinary OPEC meeting and stated that global production could be cut by 10 million barrels.
IEA's director, Fatih Birol, stated that 50 million jobs related to oil refining and retail was at risk globally.
[34] Later on 3 April, Saudi foreign and energy ministers released statements criticising Putin, blaming Russia for not taking part in the OPEC+ agreement.
[38][39] The WTI delivery price difference between months resulted in unusually high contango; purchasing cheap physical oil to storage for later sale.
[49] A trial for market manipulation is ongoing against Vega Capital London Ltd a group of nine independent traders at Essex who would buy oil futures with the expectation to win if the price went down at the end of the contract but are accused of doing so by deliberately buying big volumes and coordinating their activities to artificially push down the price, is estimated that on April 20 they traded more than BP, Glencore, and JPMorgan Chase at around 29.2% of the total volume in WTI crude oil futures and that their trades were correlated between 96.2% and 99.7%,[50][51][52] as prices went negative at the end of settlement in fact they would win money too so is estimated that in total they made around $660 million on just a few hours.
[30] Prior to opening on 9 March 2020 (Monday), the Dow Jones Industrial Average futures market fell over 1,300 points and suspended trading as a result due to a combination of coronavirus concerns and the oil price war.
[5] On Monday, 9 March 2020, stock markets globally experienced major point drops due to a combination of panic over the COVID-19 pandemic and the price war between Saudi Arabia and Russia.
[59] In the United States, the drops triggered circuit breakers designed to prevent stock market crashes, leading to 15-minute pauses in trading.
[69] Saad al-Kaabi, Qatar's minister of state for energy affairs, described the price war as a "very big mistake" in a June 2020 interview.
[71] Nigeria's Central Bank also devalued its naira against the dollar, while the country's stock market and bond prices (alongside Angola's) fell.
