Crude oil futures on Sunday dropped by the most percentage points since the gulf war of 1991, as Saudi Arabia and Russia engaged in a price war.
Saudi Arabia announced that it is cutting the price for April crude oil to all destinations by $6 to $8, as reported by Reuters, causing the oil prices to crash to their worst since early 2016.
The move followed Russia's denial to cooperate with the Organization of Petroleum Exporting Countries' decision to slash oil supply in the wake of reduced demand due to the novel coronavirus (COVID-19) outbreak.
Russia isn't a member of the OPEC group but is one of the key allied members, called OPEC+ countries.
Instead of cutting oil supply, Saudi Arabia went the other way to outdo Russia, offering a significant discount on the April oil prices.
"Saudi Arabia and Russia are entering into an oil price war that is likely to be limited and tactical," Eurasia Group noted, per Reuters.
"The most likely outcome of this crisis is entrenchment into a painful process that lasts several weeks or months, until prices are low enough to ... some form of compromise on resumed OPEC+ production restraint," it said.
Brent Oil futures traded 26.5% lower at $33.28 at press time late Sunday. West Texas Intermediate crude futures dropped 27.57% at $29.88.
Both oil benchmarks dropped below 30% in the day, their biggest single-day drop since the gulf-war of 1991.
The Saudi Arabian Oil Company, or Saudi Aramco, also suffered the outcomes from the price cut, dropping to its lowest price since the IPO at $7.99.