Oil Prices plunge as Saudi Arabia cuts prices and raises production

March 09, 2020: Oil fell by the most since 1991 on Monday after Saudi Arabia started a price war with Russia by slashing its selling prices and pledging to unleash its pent-up supply onto a market reeling from falling demand because of the coronavirus outbreak, Reuters reported.

Saudi Arabia, the world’s biggest oil exporter, is attempting to punish Russia, the world’s second-largest producer, for balking on Friday at production cuts proposed by the Organization of the Petroleum Exporting Countries (OPEC).

OPEC and other producers supported the cuts to stabilize falling prices caused by the economic fallout from the coronavirus outbreak.

Saudi Arabia plans to boost crude output above 10 million barrels per day (bpd) in April after the current supply deal between OPEC and Russia, - known as OPEC+ - expires at the end of March, two sources told Reuters on Sunday.

Brent crude futures fell by as much as $14.25, or 31.5%, to $31.02 a barrel while U.S. West Texas Intermediate (WTI) crude fell by as much as $11.28, or 27.4%, to $30 a barrel.

According to Reuters this was the biggest percentage drop since the first Gulf War in January 1991.