The collapse of the OPEC+ alliance and Saudi Arabia’s subsequent decision over the weekend to launch an all-out price war in crude has upended markets and further roiled a world already strained by the coronavirus crisis. There will be lasting consequences.
Oil prices plummeted 30% when futures trading opened Sunday night, a direct consequence of OPEC and Russia’s failed meeting on Friday. OPEC, led by Saudi Arabia, wanted to continue with its current production cuts and add an additional cut of 1.5 million barrels per day. Russia refused, causing a rift between OPEC and its non-OPEC partners, known as OPEC+. As a result, there was no agreement on any production cuts to combat the demand destruction and economic slowdown due to the novel coronavirus.