Oil Prices Suffers Biggest Crash Since 1991; What are the Reasons for Drop in the Price?
There has been the biggest crash in the oil prices since 1991, when the forces of America launched airstrikes on the troops of Iraq due to their invasion in Kuwait. The oil prices have dropped to $28, and according to the experts, there are possibilities that oil prices might drop below $20.
Crash in oil prices on Monday has frightened the countries already freaking out regarding the negative impact of coronavirus on the global economy. The prices of oil have dropped after the latest OPEC meeting. The drop in oil prices has sent shock waves across the international markets.
Causes for Drop in Oil Price
The main cause of the drop in oil prices is the price war launched by Saudi Arabia, which is the biggest exporter of Oil worldwide. Saudi Arabia took the decision as a result of the breakdown of the alliance between OPEC and Russia.
The kingdom of Saudi Arabia and Russia formed an alliance named OPEC+ in the year 2016 after the prices of oil plunged to $30 a barrel. Since the coordination of two leading exporters, the oil supply cuts to 2.1 million barrels per day. Saudi Arabia wanted to cut the production of oil to 3.6 million barrels per day through 2020 with the intent to take account of weaker consumption.
But the President of Russia Vladimir Puttin refused to agree to the deal due to concern about ceding too much ground to the producers of oil in America.
Regarding the meeting, the Founder and Chief Investment Officer of Galtere, Reene Haugerud, said,” It’s a complete breakdown,” she further said that “We could do down below $20 [a barel].”