The Biggest Drop in Oil Prices in Decades

Monday 9th of March 2020

The Biggest Drop in Oil Prices in Decades

In a matter of seconds on Sunday, the prices in oil market drops to its lowest in decades, since the Gulf War in 1991. This is fueled by sinking demand due to coronavirus concerns, which has in turn sparked a series of price cuts.

Travel restrictions affected the movement of people and goods. In addition, many people have chosen to reduce their own travel even when official restrictions would not have forced them to do so. This caused demand for oil to drop.

Saudi Arabia reduced its prices by the most in at least 20 years over the weekend. A price-cut free-for-all has broken out globally following the collapse of an OPEC+ alliance last week. The Organization of the Petroleum Exporting Countries is an intergovernmental organization of 14 nations.

Opec is currently operating under an agreement with a number of non-members to limit production. The most important, by far, of these is Russia as it is currently producing more oil than any Opec member including Saudi Arabia. However, Russia refuses to cut production.