Oil prices tumbled 31% in a matter of seconds overnight on Sunday, their sharpest decline since the Gulf War in 1991. Another shockwave that might rip through a world economy already reeling from the coronavirus.
Saudi Arabia slashed its prices by the most in at least 20 years over the weekend. A price-cut free-for-all has broken out globally following the collapse of an OPEC+ alliance last week. Talks broke down after Russia refused to meet Saudi Arabia’s request for output cuts, which would boost prices.
Futures on the Dow Jones Industrial Average sank more than 900 points, while S&P 500 futures were hit with a 4% drop at open on Monday. Goldman Sachs analysts have warned that the price of oil could tumble even further, to $20 a barrel.
The drop follows an oil prices plunge on Friday amid concerns that coronavirus will slash demand for fuel. Prices sank as much as 11% — the most since 2014.
The latest development comes after OPEC warned on Thursday that it expects global oil demand to increase by 480,000 barrels per day this year — less than half its 1.1 million barrel-per-day estimate in December. In response, it recommended cutting output by 1.5 million BPD for the rest of this year.