Faced with Russia’s refusal to once again reduce oil production in order to boost prices, the Saudi authorities have embarked on a ruthless price war which has brought down the oil and stock markets. Explanations of this three-cushion billiard game.
The Russian-Saudi couple is shattering the world’s oil and stock markets. In the wake of crude oil prices which fell 30% in 24 hours (Brent, a European benchmark, is displayed at 35 dollars against 31 dollars for the American WTI), the world financial centers plunged severely on Monday, March 9. A generalized panic which saw the CAC 40 unscrew by 5.71% at the opening like the European stock markets (-8% in London, -7.4% in Frankfurt…), Asian (-5.07% in Tokyo, -3% in Shanghai, etc.) or the Gulf (-9.2% in Riyadh, -9% in Dubai, etc.). If this plummet is partly explained by the coronavirus epidemic, which is weighing down demand from China, the world’s largest importer of oil, it is also the result of an incredible war between the three largest world producers: the United States. United, Russia and Saudi Arabia.
The starting point of this big hullabaloo was Russia’s decision to refuse a further drop in oil production on Friday March 6 during a meeting of members of the Organization of the Petroleum Exporting Countries (OPEC) to which were associated a ten states including Moscow. While Saudi Arabia, the world’s largest exporter, proposed to reduce OPEC production by one million barrels per day on the condition that Russia and other countries outside the oil cartel commit to withdrawing 500,000 barrels from the oil. market, Russia decided to reject the Saudi proposal. A coup that resulted in a 10% drop in prices on Friday. “This disagreement is due to the fact that Riyadh, which wanted to boost prices, needs a barrel close to 80 dollars to balance its budget, judge Benjamin Louvet, commodity manager at OFI Asset Management. But for Moscow, the equilibrium price is around 45 dollars. The two countries defend divergent approaches ”.