Coronavirus and the Dispute.
This whole situation began when the coronavirus become a pandemic. Many countries shut down their borders and put restrictions on flight movements.
This, in turn, slowed down the rate of trading between different countries. Oil supply was in large quantities but there was no demand to meet it hence causing deflations as price oil drops. This year recorded the lowest oil prices since 2003.
Saudi Arabia, the kingpin of oil production, was one of the countries escalating the production of crude oil and dropping its prices. Other countries were Kuwait and the United Arab Emirates. This led to a price competition amongst oil-producing countries such as Russia.
The Brent Crude Oil was once trading at $23.03 a barrel and this was the lowest on record since 2002. The United States West Texas Intermediate Benchmark was trading at a lower price than $20 a barrel.
Early March before Saudi Arabia decided to put its terms of oil production that led to price wars, there was a discussion. This forum included the OPEC and non-OPEC members in which Saudi Arabia was to reduce its production by over 1 million barrels a day.
Russia did not agree to the offer at the table and this marked an end to their discussion on the deal.
Current Meeting To Decide On The Matter Of Oil Production Cuts.
As of yesterday, the two groups were to meet and make a deal concerning the oil reductions pact. This is since the pandemic began and destroyed the demand for oil. The OPEC and OPEC+ members were to meet via a video meeting.
The reason as to why they had to communicate through a video chat, was because of the crisis at hand. The World Health Organization discourages conferences to stop the spread of coronavirus.
Donald Trump, the president of the United States, hopes for an additional oil production reduction. He adds on and says oil production in the country is already low. The energy association can take over 10 million barrels of oil off the sooq.
Brent Crude Oil currently trades at $33.35 a single barrel whereas the West Texas Intermediate trades at $25.77.
West Texas Intermediate and Brent Crude Oil close trade at higher prices than the other trading sessions. For the West Texas Intermediate, the price it closes trade with seems to be over 2.5% higher.
However, Brent Crude Oil and the West Texas Intermediate are still over 49% low than January’s highest point. The most unfortunate thing is that Saudi Arabia and Russia are still not in agreement over the amount of oil reductions.
The G-20 Meeting.
As of today, the energy heads are to assemble and arrange for their online meeting. The reason for holding the meeting is to promote teamwork to make sure of steady markets of energy. Besides, they are to enable a better world economy.
OPEC members are too sweet talk United States, Canada, Brazil, and Norway to involve themselves in the oil cut pact. This year, Saudi Arabia is to be in charge of the G-20 premiership or presidency post.