Oil Deal Collapse Hits Markets Reeling from Coronavirus Fears
With markets already struggling from fears that the spread of COVID-19 will bring global economic activity to a halt, the Saudi oil decision to drop its official price for oil could not have been timed worse.
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Markets worldwide have crashed as Saudi Arabia and Russia fail to come to terms on a deal to slow oil production.
OPEC Deal Collapses, Oil Slumps
Fissures in OPEC+ have been revealed as Saudia Arabia and Russia were unable to negotiate a deal that would see production slowed due to growth fears.
Saudi Arabia appears set to ramp up production to attract market share. Oil prices slumped 30% within minutes to $31 a barrel on Sunday, with Goldman Sachs warning $20 barrels could be a possibility.
S&P 500 futures were halted ahead of Monday trading, having slipped 5%.
The market initiated circuit breaker triggers to halt trading and prevent further losses. Markets are set to plummet at Monday’s opening bell.
Asian stocks fell broadly on the Saudi Arabian decision, with the Nikkei shedding 5%, the Hang Seng Index down over 4%, Singapore’s Straits Time Index down 6%, and the ASX 200 losing over 7% in the energy-heavy index.
The yen soared 3% against the greenback as U.S. Treasury yields slumped to below 0.5%.
Coronavirus Fears Compounded
With markets already struggling from fears that the spread of COVID-19 will bring global economic activity to a halt, the Saudi oil decision to drop its official price for oil could not have been timed worse.
Markets have also been rattled by the Trump administration’s mishandling of the coronavirus outbreak in the United States. The federal government’s insistence on language intended to downplay fears has not allayed investor concerns over COVID-19’s potential to derail growth.
It has also created uncertainty, with market participants fearing a lack of transparency may indicate quickly deteriorating economic conditions.
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