Oil Prices plunge by 20% as OPEC fails to make a deal
On March 9, 2020, the prices of crude oil plunged by 20% after OPEC to failed to make a deal in making production cuts.
The Saudi Arabia and its major allies like Kuwait, Iraq and UAE initiated to make a deal at the OPEC to reduce production of oil. This was proposed predicting reduction in oil prices due to spread of Corona Virus in the world. However, Russia the major member of OPEC refused to make the deal.
Why did Russia refuse?
With US imposing CAATSA (Countering America’s Adversaries Through Sanctions Act), several countries reduced or even stopped importing oil from Russia. This has now made Russia the fourth largest International Reserves in the world. Also, Russia is also in the state that it shall cope with lower prices.
The oil prices are expected to plunge further in the future. The Saudi has taken up new strategy targeting Russia and US shale oil firms. These firms will lose money greatly when oil prices fall below 50 USD per barrel for more than few months.