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Oil Plunges Lower After Russia Shoots Down Additional Production Cuts

Oil prices hit fresh multiyear lows Friday morning after an OPEC+ meeting in Austria failed to reach any consensus on deeper cuts to oil production, The Wall Street Journal reported.

Benzinga · 03/06/2020 21:52

Oil prices hit fresh multiyear lows Friday morning after an OPEC+ meeting in Austria failed to reach any consensus on deeper cuts to oil production, The Wall Street Journal reported.

Oil Hits Multiyear Lows 

Saudi Arabia and other OPEC members were lobbying non-OPEC member Russia to support deeper crude production cuts; Russia is open to the notion of additional production cuts, although not until the next OPEC+ meeting in June.

Brent crude traded at its lowest level since July 2017, while U.S. crude prices haven't traded this low since February 2018.

Russia-OPEC Relationship Under A Microscope 

OPEC's inability to get Russia on board likely suggests philosophical differences between the two on how best to address falling oil demand. 

But on a deeper level, i could signal that close personal relationship between Saudi Arabia and Russia has come to an end.

RBC commodities chief strategist Helima Croft told WSJ that OPEC could even be questioning its decision to extend its relationship to Russia in the first place.

OPEC members could now be asking if it was worth "ceding so much power" to a country that wasn't even a formal member of OPEC and "was not shouldering the burden" of adjusting oil supply.

Oil Analyst Projects Oversupply 

Oil prices could drop south of $40 per barrel, as the oil market will suffer from oversupply and result in "surging oil inventories" in the coming months, Helge André Martinsen, a senior oil market analyst at DNB Markets, told WSJ.

Brent crude was trading down 4.69% at $45.49 at the time of publication Friday. 

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