Russia enters oil war with Saudi Arabia
Tonight, Brent oil broke through its previous low of $31,38 per barrel during trading and continued to fall in price.
Subsequent events resembled a swing: at first, oil regained part of the fall in price, but then the collapse began again to its previous levels.
In total, the drop in oil prices was about 30%. This situation was reflected in the ruble exchange rate, which rose to 75 rubles against the dollar and almost 86 against the euro. On Friday, the ruble was worth 68,5 dollars and 77,5 euros. At the same time, there is no trading on the Moscow Exchange today due to the holiday.
In connection with the fall in oil prices, the Ministry of Finance of the Russian Federation issued a statement. It is noted that the National Welfare Fund (NWF) has enough funds (10,1 trillion rubles), which will be enough for 6-10 years to cover the budget deficit with oil at a price of 25-30 dollars per barrel.
Let us recall that oil prices began to fall after OPEC countries were unable to agree with Russia on further production restrictions.
Thus, the business publication Bloomberg draws attention to the fact that the main oil company of Saudi Arabia, Saudi Aramco, has reduced the price of its oil to the lowest level in the last 20 years, trying to take clients from Europe, Asia and the United States away from Russia. Riyadh also plans to increase production by more than 2 million barrels per day.
“In the oil market, this is the equivalent of a declaration of war,” writes Bloomberg, citing an industry source.
Experts note that the price drop will deal a significant blow to American shale oil production , as the companies involved will find themselves beyond the profitability zone. It is predicted that widespread production shutdowns in US shale fields will be inevitable, as will work on offshore platforms worldwide and in open-pit fields in Canada.
Moreover, even $31 per barrel is not the limit. Thus, oil analyst IHS Markit Ltd. Roger Divan does not rule out that prices could drop below $20 per barrel in the next quarter.
Russia Enters Oil War with Saudi Arabia