Russia and Saudi Arabia Oil Feud
BY: Tehreem Chohan
The Covid-19 pandemic has caused disruption across the world for everyone with the paranoia of the spread of the virus affecting society as a whole. No one is safe, especially the economy with the entire world completely shutting down to decrease the probability of contracting the virus. But one problem has been circulating in the news that is causing a lot of trouble and that is the oil feud between Russia and Saudi Arabia. Two big oil-field countries fighting for power during a fragile state of humanity.
The war started when Russia refused to reduce oil production for it to be affordable for anyone. This followed to a huge drop in the price of oil which triggered Saudi Arabia and ended with a price battle between the two. This made a big impact on the oil industry with the price of oil dropping 65%, the US by 34%, Crude Oil by 26%, and Brent Oil by 24%. The conflict has caused a breakup of the OPEC and a major reason why oil stocks are falling. Even though both countries have denied any issues with each other, the media and the public can say otherwise, with the Russian currency dropping 7% against the US dollar. Throughout the pandemic, oil stock prices have been decreasing and going to a new low because of the struggle between Russia and Saudi Arabia.
This conflict between the two nations caused the US to step in and force both countries to agree and join forces with the OPEC to protect the prices from crashing further in the stock market. The pressure came from the fear of lost jobs for American workers and mayhem in Wall Street. The outcome of the meeting had OPEC agreeing to cut 10 million barrels a day throughout May and June. This means that Russia and Saudi Arabia have to cut 8.5 million barrels a day for being the biggest producers. It reduced 10% of global mass which equivalates to 35 million barrels a day. Suggestions have surfaced for nations and companies outside of OPEC to also join to save the droppings that are occurring. The G-20 has given aid to increase what was lost during the crash from the beginning of the pandemic and the cut can decrease as the year goes by to 6 million a day in January 2021.
The pandemic oil feud ended after 31 days and even though it was short, it affected the price of oil globally and resulted in major changes for it to finish. Although the fight is done, oil prices are still struggling to be stable and will try to balance in the following months with a scare in the future of another problem. Covid-19 has become one of the biggest issues for the world in the 21st Century, with everyone struggling to be stable during the pandemic. But no one is having a bigger issue than the stock market; especially the oil industry. With the two biggest producers fighting for dominance because of the virus, who knows what else is in place for the world in this year.