Oil futures suffered their biggest daily loss since 1991 on Sunday after Saudi Arabia slashed its official selling price (OSP) and announced plans to raise crude production significantly, signaling the start of a price war, APA reports citing Reuters.
Those moves came after Russia on Friday balked at OPEC’s proposed steep production cuts to stabilize prices hit by economic fallout from the coronavirus.
Saudi Arabia said it plans to boost crude output above 10 million barrels per day (bpd) in April after the current deal to curb production between OPEC and Russia - known as OPEC+ - expires at the end of March, two sources told Reuters on Sunday.
Saudi Arabia cut its OSP for April for all crude grades to all destinations by anywhere from $6 to $8 a barrel, sending oil into a tailspin.
Brent LCOc1 futures fell $9.95, or 22.0%, to $35.32 a barrel by 6:34 p.m. EDT (2234 GMT), while U.S. West Texas Intermediate (WTI) crude CLc1 fell $8.99, or 21.8%, to $32.29.
Earlier in the session, both contracts fell to their lowest since February 2016, with Brent down to $31.02 per barrel and WTI at $30.
That puts Brent and WTI on track for their second biggest daily percentage drops in history behind declines for both in January 1991 over 30%.