Oil price plunges to 17-year low amid price war, glut

Dubai - The oil markets have been slammed by demand destruction caused by the coronavirus pandemic.

Crude oil benchmarks fell sharply on Monday, with Brent hitting its lowest since November 2002, as the Covid-19 pandemic lockdowns cascaded through global economies amid an escalating price war and a ballooning surplus inventory.

Brent futures were down 6.7 per cent, or $1.68, to $23.25 a barrel as of 0249 GMT, after earlier dropping to $23.03, the lowest since November 2002.

US West Texas Intermediate (WTI) crude futures fell as far as $19.92, near an 18-year low hit earlier this month, and was last trading down 5.4 per cent, or $1.17, at $20.34 a barrel.

Analysts said physical oil markets are struggling to store fuel, hit by "a double whammy of virus restrictions eroding demand and a damaging war for market share between Saudi Arabia and Russia that has prices on track for the worst quarter on record".

The oil markets have been slammed by demand destruction caused by the coronavirus pandemic and the Saudi Arabia-Russia price war that is flooding markets with extra supply.

Saudi Arabia said on Friday it was not in talks with Russia to balance oil markets despite rising pressure from Washington to stop a price rout amid the coronavirus pandemic. A senior Russian official had said prior to that on Friday that a larger number of oil producers could cooperate with Opec and Russia to support prices.

Demand for oil is expected to shrink 15 million to 20 million barrels per day as more countries impose and extend lockdowns to curb the spread of the pandemic.

issacjohn@khaleejtimes.com