U.S. oil prices continued their freefall Wednesday, with crude prices reaching a 17-year low, down to $26.95 a barrel as the spread of the coronavirus triggers further panic in the markets.
The last time oil prices were this low was in 2002. The demand for fuel is also in decline due to a drop in air travel.
The drop in prices is squeezing U.S. shale companies.
The leaders of the International Energy Agency and Organization of the Petroleum Exporting Countries warned in a joint statement that developing nations’ oil and gas income will fall by 50% to 85% in 2020, citing an IEA analysis.
If current market conditions continue, the income vulnerable developing countries see from oil and gas will fall to their lowest in more than two decades, which is likely to have “major social and economic consequences” for public sector spending in vital areas such as health care and education, according to OPEC.
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The OPEC Price War
During the March 6 OPEC meeting, Russia refused to sign on to additional cuts proposed by OPEC producers. Saudi Arabia decided to increase its oil production and launched an oil price war.
On Tuesday, Iraq’s oil minister appealed for an emergency meeting between members of the OPEC and non-OPEC producers to discuss immediate action to help balance the oil market, Reuters reported.