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Oil price war came at the worst possible time, and a truce between Moscow and Riyadh can’t come too soon

16 28 54

In almost a month since Saudi Arabia and the United Arab Emirates ramped up production – ostensibly to punish Russia for refusing to accept additional cuts under OPEC quotas – the oil price has crashed by over 70 percent, with Brent crude at $32.5 and WTI at $24.5 a barrel as of Tuesday.

Just days later, the bump in production met the sudden collapse of demand, as almost half the world – from North America to Europe and the Indian subcontinent – found itself stuck at home due to the coronavirus pandemic.

“The global economy has been dying of accumulated debt for 50 years. Coronavirus has sent it to the intensive care unit,” Oilprice.com analyst Arthur Berman wrote on Monday in a gloomy retrospective.

The US ended up getting hit the hardest, by both the pandemic and the price war. Its shale oil prospectors have been behind the boom in production over the past decade, and the emergence of America as a major oil supplier since 2015. Their success depended on arbitrage between Brent and WTI, however. Now that it has gone negative, the heavily indebted shale sector is in ruins, rigs are shutting down and crude is selling for as low as $10 a barrel in places.

Energy analysts all........

© RT.com