Saudi oil minister Prince Abdulaziz bin Salman Al-Saud has thrown the global oil market into chaos with an aggressive strategy.
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AFP
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On Sunday, world market prices for crude oil fell by around 25 percent.
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Corbis
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This corresponds to the strongest drop in oil prices since the Gulf War in 1991.
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imago images
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The energy market is now facing a simultaneous supply and demand shock.
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Keystone
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It remains questionable whether and when Swiss consumers will also benefit from the price cuts.
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The price of oil dropped about a quarter on Sunday evening. That corresponds to the biggest drop in prices since the Gulf War in 1991. At times the price dropped by 30 percent. The background is the fear of a price war among the oil producing countries after the failure of the talks between Opec and Russia over a common production brake.
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Saudi Arabia, the world’s largest oil exporter, is not only threatening to massively increase its oil production. On Saturday, the Saudi Arabian state-owned oil company Saudi Aramco announced that it would lower the official sales price (OSP) for all types of oil and all customers. For example, deliveries to Europe, Asia and the USA are said to be cheaper by eight dollars per barrel.
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Shortly after trading began on Sunday evening, Brent crude oil from the North Sea cost $ 33.59 per barrel (159 liters each). That is 25.8 percent less than on Friday evening. US light oil fell 23 percent to 32.06 cents per barrel. At times, the Brent price had dropped to $ 31.02 per barrel and for US light oil to $ 30 per barrel.
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Maximum pain limit
Since the demand for oil has dropped massively due to the outbreak of the corona virus, the oil market now faces chaos with the opening of the production taps. “Saudi Arabia is now really in a full price war,” said Iman Nasseri, Middle East managing director at oil consultancy FGE, the Bloomberg news agency.
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With the largest price cut in more than 30 years, Riyadh has reduced the cost of its crude oil significantly below the cost of Russian oil. The Saudis also want to increase oil production to a record twelve million barrels a day.
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The shock strategy of Saudi Arabia is seen as the risky attempt to inflict the greatest possible pain on Russia and other producers as quickly as possible in order to bring them back to the negotiating table. The increase in production and the fall in prices mark a dramatic escalation of Saudi Arabia’s oil minister Prince Abdulaziz bin Salman after his Russian counterpart Alexander Novak rejected an ultimatum to participate in a collective cut in production at the Opec + meeting in Vienna on Friday.
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Corona economic shock
The price of oil had been under pressure in recent weeks. The cause was the fear of a downturn in the global economy as a result of the spread of the coronavirus.
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Since the consumption of jet fuel, petrol and diesel has declined rapidly due to the economic impact of the coronavirus outbreak, the energy market is now facing a simultaneous supply and demand shock.
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It is questionable whether and when the price cuts will also show up at the petrol pumps for Swiss end users.
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Stock exchanges also start deep red this week
Stock indices worldwide are also showing a deep red at the beginning of the week, while the oil crash and the new corona virus keep investors in suspense.
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S&P 500 futures dived up to five percent local time on Sunday evening, triggering a security mechanism that prevents futures from being traded under that brand. Dow Jones futures fell more than 1000 points, or about 4.1 percent. Nasdaq composite futures down 4.3 percent.
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The sell-off on the stock exchanges also affected the Asia-Pacific region, where the Australian S & P / ASX 200 fell more than five percent on Monday. That is the biggest drop since November 2008. The Japanese Nikkei 225 sank by more than four percent and was recently below 20,000 points, the lowest level in more than a year. (kes)