Oil price down as coronavirus forces Saudi Arabia to start a price war

Oil price down as coronavirus forces Saudi Arabia to start a price war

- Saudi Arabia has triggered a fall in oil prices following the effects of the coronavirus on oil markets

- The move, which is the first in almost 30 years, comes before a planned boost in the production of crude oil in April 2020

- The decision was reached after Russia refused to reduce output in order to stabilise the market, as per recommendations by the OPEC

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Oil prices have experienced a slump after Saudi Arabia started a price war in the market following the global effects of the coronavirus on the commodity.

The latest development, the first in 29 years, led to a loss of more than a quarter in the price of oil.

Briefly.co.za understands that Saudi Arabia, the world’s biggest oil producer, reduced its official selling prices and has plans of boosting production of crude in April 2020.

READ ALSO: Coronavirus: Sandton school closes over contamination concerns

Oil prices fall as coronavirus ‘forces’ Saudi Arabia to start a price war

Source: Reuters.com
Source: UGC

This comes after Russia hesitated in making a steep output cut as recommended by the Organization of Petroleum Exporting Countries (OPEC) in a bid to stabilise oil markets.

Reuters.com reports that Brent crude futures were down by $11.81, or 26%, at $33.46 a barrel by 0650 GMT, after earlier dropping to $31.02, their lowest since February 12, 2016.

Brent prices are on track for their biggest daily decline since 17 January 1991.

This was when prices fell at the beginning of the first Gulf War, as the market had been expecting the war for months.

OPEC+, which consists of OPEC members as well as other oil producers such as Russia, is set for disintegration and this comes after three years of cooperation to support the oil market.

Saudi Arabia has plans of increasing its crude output over 10 million barrels a day in April after the current deal to halt production ends in March 2020.

This has been interpreted as a move to punish Russia, which is the world’s second-biggest oil producer, for its decision to refrain from supporting the production cuts recommended OPEC.

READ ALSO: Coronavirus chaos: Video shows women fighting over toilet paper

In other news, plans are in place to get the road network repaired in Kenya as it issues its first ever road bond worth $1.5 billion.

According to the Infrastructure Principal Secretary Paul Maringa, the bond would be issued by June 2020 through the Treasury.

He added that a part of the funds would be diverted towards the settlement of pending bills.

Maringa went on to say that the Kenya Roads Board has received authorization from the government to borrow funds from commercial lenders.

The funds, per a Business Insider report, would be leveraged by annual Parliamentary appropriations under the development budget.

He also noted that it would take 10 years to pay off the current outstanding commitments, which are currently estimated at $6.4 billion in case no new projects are introduced.

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Source: Briefly.co.za

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