Crude oil prices fall sharply as Saudi Arabia, Russia postpone meeting about pact to cut production

Global crude oil prices fell sharply on Monday morning, as uncertainty loomed in the market after Saudi Arabia and Russia postponed to April 9 a meeting about a potential pact to cut production, Reuters reported. The prices of West Texas Intermediate and Brent crude traded over $3 lower before slightly recovering.

At 12.37 am EDT (10.07 am Indian Standard Time), West Texas Intermediate was trading at $27.25, $1.75 or 6.03% lower. On the other hand, Brent crude was trading at $33.44, $1.21 or 3.49% lower.

United States President Donald Trump had said over the weekend that he will put pressure on Saudi Arabia and its allies for a deal with Russia. Trump said on April 4 that he will impose tariffs on Saudi and Russian oil production.

Russian President Vladimir Putin had last week blamed Saudi Arabia for the crash in oil prices. The prices had gained considerably on April 3 due to rumours of a possible deal between the two countries. However, Per Magnus Nysveen, head of analysis at Rystad Energy, told Reuters that decline in global demand for oil because of the coronavirus pandemic and the global lockdowns was affecting oil prices more than the proposed output cuts by the OPEC+ alliance.

“It is not strange for the market to hike prices by enthusiasm such as Friday’s, but for the levels to stay stable for more than a day or two, it takes concrete developments and deals on the ground,” he said.

The Organization of the Petroleum Exporting Countries, which includes Saudi Arabia, and its allies are working on a global agreement for an unprecedented oil production cut equivalent to around 10% of worldwide supply, in what they expect to be a global effort including countries that do not exert state control over output – such as the United States.

Russia is the world’s second-largest producer of crude oil, while Saudi Arabia is the world’s largest exporter. Saudi Arabia and other OPEC countries wish to cut oil production in a bid to stabilise supply following the coronavirus outbreak. However, oil prices fell to a 29-year low on March 9 last year when Russia and Saudi Arabia began a price war, with Moscow being opposed to the cuts.