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Oil cheaper by 30%: Saudi Arabia launches price war with Russia

Oil prices saw the biggest drop since 1991 on Monday after Saudi Arabia launched a price war with Russia, cutting sales prices and vowing to release its hitherto held stocks in a market shaken by declining demand over the outbreak of the new coronavirus , Reuters reported, quoted by BTA.
The price of the Brent variety dropped 31.5 percent or $14.25 to $31.02 per barrel. That was the biggest drop as a percentage of price since January 17, 1991 at the start of the Gulf War, as well as the lowest price since February 12, 2016. As of 1.14 hours Greenwich, the price of the Brent variety was $32.61.

West Texas oil variety got cheaper by 27.4 percent or $11.28 to $30 a barrel. It was also the biggest drop since the Gulf War and its lowest price since February 22, 1991. As of the same hour, the variety was trading at levels of $32.61.

Saudi Arabia, the world's largest oil exporter, is trying to punish Russia, the world's second-largest producer, for not agreeing on Friday to a production cut that OPEC countries have proposed. OPEC and other producers wanted to impose restrictions on production to stabilize falling prices as a result of the consequences of the outbreak of the new coronavirus.

Saudi Arabia plans to increase crude oil production to over 10 million barrels per day in April after the current supply agreement between OPEC and Russia (known as OPEC+) expired at the end of March, two sources told Reuters on Sunday.

The consulting company Yureysha Group (Eurasia Group) has predicted that the current price oil war between Saudi Arabia and Russia is likely to be limited and tactical. According to the company's analysis, the most likely outcome of the crisis will be a painful process that will last several weeks or months until prices drop enough to reach some compromise on renewed OPEC+ production limits.

Saudi Arabia started the war by cutting official April sales prices for all crude oil varieties to all destinations between $6 and $8 per barrel.