Saudi Arabia has announced it will slash its official selling prices for crude by between $4 and $8 per barrel, Arab News reports, to be in effect from April when the current production cuts expire.
The biggest discounts were offered to buyers in northwestern Europe and the United States.
The announcement pressured already severely hurt benchmarks after the failed meeting of OPEC+ on Friday when Russia refused to take part in further cuts that would have reduced global oil production by a total 3.6 million bpd.
"As from 1 April we are starting to work without minding the quotas or reductions which were in place earlier," Energy Minister Alexander Novak said on Friday, adding "but this does not mean that each country would not monitor and analyze market developments."
"We are likely to see the lowest oil prices of the past 20 years in the next quarter," Arab News' Frank Kane quoted an IHS Markit analyst as saying.
This is very likely to happen, indeed: at the time of writing, Brent crude was trading close to $32 a barrel, with West Texas Intermediate at below $29 a barrel, with more space to fall as coronavirus-fueled worry about the global economy deepens amid news about new cases, a lockdown for 16 million people in northern Italy and reports of the first case in Washington D.C.
"I don't think this was premeditated but Saudi Arabia has clearly swung quickly into action to put the Russians under pressure," Robin Mills, head of consultancy Qamar, told Arab News. "But the Russians, with low debt and a flexible exchange rate, can cope with a few months of low prices."
Banks have already begun slashing their short-term price forecasts: Morgan Stanley said it had cut its Brent crude outlook for the second quarter to $35 a barrel from $57.50, CNBC reported Sunday.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More