Oil Wars

Picture: https://time.com/5806218/russia-saudi-arabia-oil/

Picture: https://time.com/5806218/russia-saudi-arabia-oil/

Oil prices have tanked in the past couple of weeks due to COVID-19. Many different countries are even talking about what to do and who it affects.

According to Student Daily News, Saudi Arabia’s Prince, Mohammed bin Salman, decided to speak to OPEC; the Organization of the Petroleum Exporting Countries. This was in regards to the oil prices in the market after the COVID-19 outbreak since there isn’t a large need for oil with the decrease in transportation.

Saudi Arabia strongly suggested to Russia that participants of OPEC should cut production by at least one million barrels of oil per day, collectively. However, Saudi Arabia wanted Russia to take the largest cut and decrease production by 500,000 barrels per day even though they aren’t a member of OPEC.

For many, this is a huge difference in the market and leads to drastic price changes. China was the largest oil consumer. However, after the COVID-19 outbreak, there has been a halt in their economy concerning oil.

Saudi Arabia decreased their prices on oil by about $11. This left their price at $35 per barrel. This is part of a price war with Russia creating “the largest one day drop since the Gulf War in 1991” according to Javier Blas, a writer for Fortune.

Russia and Saudi Arabia are both in agreement when it comes to trying to hurt the U.S. economy with fluctuating oil prices to help them. They want to target U.S. shale even though the economy should be able to withstand the damage according to Foreign Policy.

BofA’s Moscow-based oil and gas analyst, Karen Kostanian, says that Russian Companies, “can ensure sustainable production until oil (in the market) hits $15 to $20 per barrel.”

This doesn’t just exclusively affect countries outside of America. In the U.S., West Texas Intermediate began selling its oil at $30.40 per barrel which is 7.8% lower than normal. 

President Trump gave an announcement on March 11, 2020 that travel should be eliminated to continental Europe due to COVID-19. 

Russia is not a part of OPEC, but since they contribute so much to the production of oil, they were invited to the meeting. Russia has a decision to make: whether to cooperate with Saudi Arabia, or whether to just compete in the oil industry.