As top exporter Saudi Arabia and Russia have intensified their oil price war, oil prices surged more than six percent in Asian trade on Tuesday. Both the nations threatened each other to flood the world with hundreds of extra barrels of oil in the coming weeks.
Last week Saudi Arabia asked the OPEC members to reduce the oil production by 1.5 million barrels per day. The decision was made by the nation to “stabilise” the falling prices amid the global economic trouble caused by the coronavirus outbreak. However, Russia refused Saudi Arabia’s appeal which prompted Saudi Crown Prince Mohammed bin Salman to announce huge price cuts for Saudi crude over the weekend.
The latest move aims to encourage global refiners to use more Saudi oil and aggressive plans to increase the country’s daily production from 9 million to 11 million per barrels per day next month. As a result, oil prices surged more than six percent in Asian trade on Tuesday.
West Texas Intermediate was trading up 6.1 percent at more than $33 a barrel while Brent crude advanced 6.6 percent to over $36 a barrel. The move plunged oil prices by almost a third Monday, the biggest drop since the 1991 Gulf War.
Saudi Aramco has decided to intensify the war by pledging to increase its total output to a record 12.3 million barrels per day, an increase of 300,000 barrels above the company’s maximum sustained capacity.
In return, Russian Energy Minister Alexander Novak immediately after declared his country’s oil producers could increase the production by 500,000 barrels per day, boosting Russia’s daily output to 11.8 million barrels. He said that he is also ready to further hold negotiations between OPEC and Non-OPEC nations. Saudi Arabia led OPEC+ is an informal alliance of OPEC’s 14 members. The current OPEC+ agreement on oil production volumes expires on March 31.