All New Crash for Oil Market

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Drilling for crude oil is halted as there is no room to store this falling treasure. (Photo Credit: Business Standard)

Bella Perez, Contributor

Oil prices suffered an all time historic collapse in April of this year after Saudi Arabia disturbed the market by gouging a price battle against their ally Russia. As an aftershock of the war, United States oil prices have crashed as much as 34% to $27.34, the lowest it has been in four years. Crude finished with a staggering loss of nearly 26% to settle at $31.13 a barrel. Brent Crude, has plunged 24% to close at $33.36 a barrel. These oil contracts suffered the worst shock since 1991.

The shock to oil also rattled stock markets, which were already being affected deeply because of the infamous coronavirus outbreak. There have been several attempts to fix this issue of pricing between Saudi Arabia and Russia. Russia has refused to go along with OPEC’s proposal to attempt to fix the Coronavirus affected oil market by continuing to cut production. This standoff left the oil industry baffled and initiated a 10% plunge in oil prices. Crude oil was already stuck in a bear market because of a sharp drop in demand linked to the coronavirus outbreak.

It looks like Saudi Arabia is taking the situation into their own hands, because they are preparing for a price war. It is also apparent that Russia’s refusal to cut production has amounted to a slap to U.S. shale oil producers and provides flashbacks for producers of the 2014-2016. That oil crash caused dozens of oil and gas companies to file for bankruptcy and hundreds of thousands of layoffs. However, the U.S. shale industry emerged stronger from that period and the United States eventually became the world’s leading oil producer. This is affecting people all over the world financially.