Oil prices plunge about 20%

The price of crude oil has plunged by more than 20 percent after Saudi Arabia, the world’s top oil exporter, said it would step up production from next month.

Brent crude futures slid 30 percent to 31.02 US Dollars a barrel in chaotic trade this morning, before recovering slightly to  36.06 US Dollars, a drop of 20 percent on Friday night’s close. It was the worst one-day fall for brent since the start of the first Gulf war in 1991.

The decision by Saudi oil company Aramco over the weekend came in response to Russia’s refusal to join the plan of Organization of Petroleum Exporting Countries to cut supplies.

The new strategy



adopted by Riyadh appears to target Russia and US shale oil firms, many of which are known to have high production costs and lose money when crude prices fall below 50 US Dollars a barrel for more than a few months.

Other OPEC producers, such as Iraq, Kuwait and the United Arab Emirates, are expected to follow Saudi Arabia’s lead with price cuts and increased production from April.

The Saudi decision came after marathon talks at the OPEC Headquarters in Vienna when the Russian Energy Minister Alexander Novak said that from 1st of April neither OPEC nor non-OPEC countries had any restrictions on production.