OPEC meets fail; Brent crude falls to US$ 31

On March 6, 2020, OPEC and its alliance did not come to an agreement on production cut amid weakening crude oil prices due to a sluggish demand owing to economic slowdown triggered by Coronavirus. The world’s largest crude oil producer-Saudi Arabia wanted to take production cut to underpin the weakening crude oil prices but the non-OPEC alliance (Russia) did not agree on this proposal and so, the deal could not get breakthrough.

Russia was of the belief that lowering crude oil production is resulting in the shift of demand to US shale oil. Post OPEC meeting, which failed to take any concrete decision on production cut, Saudi declared a record price cut in its oil prices for Asia, US and Europe. This has triggered the price war which could hit negatively to heavily Crude dependent Saudi Arabian economy.

However, for a country like India, which relies mostly on imports to meet its oil demand, these lower prices augur well amid slowing economic activities. Players in the industry like paint, tyre, airline, fertilisers, chemical, etc are expected to benefit from lower crude prices as it is a key raw material for these industries. But, in terms of demand, the major industries are going through a challenging phase because of the outbreak of Coronavirus.

The Brent crude today fell as much as 30 per cent to trade at US$ 31.3

Here is how crude has performed since 2008: