Why crude oil prices are falling fast today?
Saudi Arabia slashed prices over 30% on Monday
Oil pricings have frequently been fluctuating recently due to the decisive differences during the OPEC meeting held in Vienna last Thursday. Crude oil prices declined more than 30% on Monday after Saudi Arabia reduced oil prices and has set the plan for the increase in crude oil production in the upcoming month and one of the biggest reasons behind why crude oil prices are falling fast today.
West Texas Intermediate traded 30.96% crude oil at the price of $28.50 per barrel in the global market as compared to Brent, crude oil prices were down 28.61% at $32.32 per barrel. The oil price of international benchmark Brent crude could also fall into the $20 range. These are the lowest levels in history to which both traders have fallen.
The reason behind why crude oil prices are falling fast today
The fluctuations in the pricing of crude oil began when Saudi Arabia decided to start a price war with Russia after they declined to make cuts that were proposed by OPEC that would lead to the stabilization of the oil markets, which were disrupted after the worldwide epidemical fear of the novel coronavirus.
Now, Saudi Arabia is planning to magnify its country’s crude oil output which is expected to be above 10 million barrels per day in the coming month of April as the current deal between the countries is about to expire by the end of March 2020 and why crude oil prices are falling fast today worldwide. The country is currently producing 9.7 million barrels per day. It has the capacity to increase it to 12.5 million barrels per day.
The decrease in crude oil prices has come to its lowest point in Saudi Arabia in the last 20 years of export. This is Saudi Arabia’s, the biggest oil-exporting company globally; attempt to discipline Russia for not supporting the cuts that were proposed last week on Thursday during the OPEC meeting.
Who will benefit from it?
Many different industries across the world are benefiting from the decline in oil prices, including tire industry, Synthetic fiber producers, oil marketing companies, and those businesses which consume oil derivatives such as paint, lubricants, engine oil, plastics, soap, and detergent. The benefits of the decrease in crude oil prices will primarily affect petroleum corporations across the globe.
Will the pricing further fall or stabilize?
Why crude oil prices are falling fast today were not expecting a month ago, but the issue escalated after the global outbreak of coronavirus and when OPEC refused to accept the demands placed during the meeting of the Organization of Petroleum Exporting Countries last week.
The only thing that would help in the stabilization of the crude oil prices would be a deal between Russia and Saudi Arabia, where they would come to terms with the decision at 60%, which is to be expected in the upcoming weeks. Even Saudi Arabia could not tolerate the reduction in price as it would also affect the country’s economic factor.
A carnivorous worldwide epidemic which is also why crude oil prices are falling fast today, If there is a discovery of its vaccine, that would play a significant role in the stabilizing and further increase in crude oil prices as one of the top major importer of oil, China, will restart its oil import and will help in the stabilization of the country’s economy whose primary export is oil.
Also, why crude oil prices are falling fast today is due to the increasing amount of oil production by Saudi Arabia, if the quantity of oil is massive, that would ultimately decrease the value of the price around the world, and several countries’ economy might decline.