The price of oil is currently plummeting sharply. Yesterday afternoon, WTI oil was still quoted at 48 Dollars, whereas it was already at 43.29 Dollars at its low this morning. Currently there are rapid movements just under 44 Dollars. The market is extremely nervous! First a step back on the trail. Yesterday it became known that OPEC is already cutting a total of 1.5 million barrels per day of oil production together with its external partners (mainly Russia). This is intended to counteract the collapse in demand caused by the corona virus. Ultimately, this action should push the oil price back up.
Oil price falls because of alleged resistance from the russian side
But for weeks now there has been no clear signal from Russia whether they are on board with the big cutbacks. Statements from OPEC circles yesterday made it clear that the whole cutback can even be cancelled if Russia refuses. And today? Today we hear that Russian officials are letting it be known that they will probably refuse to make a cut. This is not really certain yet. But the oil price is currently reacting with these significant losses.
Nervousness has been high for the last 24 hours, when the price of oil has continued to fall. And then by these current statements the current price slide, in the last minutes from 44.80 Dollars downwards to now, as said, below 44 Dollars. What a disaster for the oil bulls. Are the Saudis using their last wild card, and cutting production on their own? Then all the other producing countries are happy, who do not participate in the cutbacks when the oil price rises and they themselves did not even have to cut production.
Only the Saudis would be the big losers. Are they going to do that, like they did in the past? This is a complicated situation for the cartel. At the moment the market is down, and if and how much down is possible in the oil price – unclear! But can the market rise suddenly? Because as Amena Bakr says… the talks are still going on!