The price of WTI crude, one of several major benchmarks in oil prices, collapsed to $25.08 per barrel, its lowest indicator since November 2002, in Wednesday trading.
The 5 percent+ slide in prices for May futures follows a slight recovery Tuesday to $25.55. Other benchmarks including Brent also dropped Wednesday, with the latter slipping 5 percentage points to below $27 per barrel, its lowest indicator since November 2003.
Analysts attribute the drop in demand to COVID-19 fears, which have forced major industrial nations to shutter factories and go into lockdown mode, as well as the ongoing Saudi-Russian dispute on production cuts which ended without agreement earlier this month, and prompted both Riyadh and Moscow to increase output.
The OPEC basket dropped dropped 3.5 percent and is trading at $30.65 per barrel Wednesday afternoon Moscow time, while the Urals benchmark has slid 3.4 percent to $27.40 per barrel.
OPEC+ ministers met in Vienna on March 6, with the Saudi delegation pushing for an additional 1.5 million barrels per day (bpd) cut through the end of 2020, on top of the 2.1 million bpd in cuts already in place, for a total of 3.6 million bpd, or 3.6 percent of global supplies. Russian Energy Minister Alexander Novak said Russia could only agree to extend the existing (2.1 million bpd) cuts. Riyadh and its OPEC partners refused, offering discounts on April futures and announcing that they would increase crude output in the months that followed, with Russia following suit.
US-based financial services and analytics company S&P Global predicted Tuesday that fears over the new coronavirus would likely lead to a global recession later this year, with countries around the world announcing emergency stimulus funding measures to try to soften the blow of the downturn for banks and businesses.
The Trump administration announced an $800 billion package of fiscal measures on Monday in a bid to shore up cash flow and liquidity, while UK Chancellor of the Exchequer Rishi Sunak announced Tuesday a package of support for the British economy which he said was previously "unimaginable" in its scale. Russia's cabinet and Central Bank announced its own measures to ensure economic and financial stability on Tuesday. China, meanwhile, has made an effort to restart economic growth in the second quarter amid ongoing efforts to deal with the coronavirus.