You are here: Home » International » News » Markets
Business Standard

Oil prices fall as Saudi moves to boost output amid price war with Russia

West Texas Intermediate fell 1.7% to about $33 a barrel while Brent crude was off 1.7% at $36 a barrel

Oil Prices | Russia | Saudi Arabia

AFP/PTI  |  Singapore 

Oil, Opec, Cushing, West Texas Intermediate crude
Saudi Arabia and others from oil-exporting cartel OPEC led a push last week to reduce output further to shore up prices amid slumping demand due to the new coronavirus

fell heavily Wednesday, reversing gains made earlier in the day, as moved to boost output capacity in an escalation of a price war with

West Texas Intermediate fell 1.7 per cent to about $33 a barrel while Brent crude was off 1.7 per cent at $36 a barrel. Both contracts had been up as much as four percent earlier in the day.

Crude have been in turmoil since the start of the week after Riyadh slashed prices following a bust-up with Moscow over output cuts, leading to the biggest one-day drop for almost 30 years.

Prices had risen strongly on Tuesday and early Wednesday, however, as investors focused on promises by US President Donald Trump to launch stimulus measures to combat the economic impact of the coronavirus outbreak.

But energy titan Saudi Aramco's announcement that it would raise production capacity by one million barrels per day to 13 million bpd halted the rally in its tracks -- and prices quickly fell back into the red.

The company said it had received instructions from the energy ministry to raise capacity.

Trump had promised to introduce measures to combat the virus epidemic such as assistance to airlines and cruise companies, two especially hard-hit industries -- but investors are growing worried about the lack of concrete action.

"The market rally based on Trump's economic stimulus alone is unlikely to be sustainable" given the amount of oil that will soon be hitting the market, Howie Lee, an economist at Oversea-Chinese Banking Corp, told Bloomberg News.

This week's oil rout was triggered by Riyadh driving through the biggest price cuts in two decades at the weekend, following Moscow's refusal to agree to reduce production.

and others from oil-exporting cartel led a push last week to reduce output further to shore up prices amid slumping demand due to the new coronavirus.

But Moscow, the world's second-biggest oil producer, blocked the move -- signalling an alliance with that was aimed at supporting the market was unravelling.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, March 11 2020. 13:38 IST