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Monday 9 March 2020

Crude Falls after Russia Reportedly Rejects OPEC+ Supply Cuts

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LONDON (Reuters) — Oil prices lost as much as a third of their value on Monday in their biggest daily rout since the 1991 Gulf War after Saudi Arabia signalled it would hike output to win market share when the coronavirus has already left the market oversupplied.

The disintegration of the grouping called OPEC+ — made up of OPEC plus Russia and other producers — ends more than three years of cooperation to support the market, after Russia balked at making a further steep output cut proposed by the cartel.

Saudi Arabia plans to boost its crude output above 10 mln barrels per day (bpd) in April (instead 9.7 mln bpd in recent months) after the current deal to curb production expires at the end of March, two sources told Reuters on Sunday. The Kingdom also slashed its official selling prices next month by $6-$8 a barrel.

Brent crude futures were down 22% at $37.05 a barrel by 10:00 GMT, after early dropping by as much as 31% to $31.02, their lowest since February 12, 2016. WTI fell by more than 24%, to $33.20 a barrel, after initially falling 33% to $27.34, also the lowest since February. 12, 2016. The U.S. benchmark’s biggest decline on record was in 1991 when it also fell by a third.

Saudi Arabia, Russia and other major producers last battled for market share in 2014 as they tried to put a squeeze on production from the United States, which is not participating in any oil limiting pacts and has grown to become the world’s biggest producer of crude.

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