#BlackMonday no relation 2020 Russia–Saudi Arabia oil price war
Russia–Saudi Arabia oil price war
The reduction in the demand for travel and the lack of factory activity due to the COVID-19 pandemic significantly impacted demand for oil, causing its price to fall. In mid-February, the International Energy Agency forecast that oil demand growth in 2020 would be the smallest since 2011. Chinese demand slump resulted in a meeting of the Organization of the Petroleum Exporting Countries (OPEC) to discuss a potential cut in production to balance the loss in demand. The cartel initially made a tentative agreement to cut oil production by 1.5 million barrels per day following a meeting in Vienna on 5 March 2020, which would bring production levels to the lowest since the Iraq War.After OPEC and Russia failed to agree on oil production cuts on 6 March and Saudi Arabia and Russia both announced increases in oil production on 7 March, oil prices fell by 25 percent. On 8 March, Saudi Arabia unexpectedly announced that it would increase production of crude oil and sell it at a discount (of $6–8 a barrel) to customers in Asia, the US, and Europe, following the breakdown of negotiations as Russia resisted calls to cut production. The biggest discounts targeted Russian oil customers in northwestern Europe.Prior to the announcement, the price of oil had gone down by more than 30% since the start of the year, and upon Saudi Arabia's announcement it dropped a further 30 percent, though later recovered somewhat. Brent Crude, used to price two-thirds of the world's crude oil supplies, experienced the largest drop since the 1991 Gulf War on the night of 8 March. Also, the price of West Texas Intermediate fell to its lowest level since February 2016. Former George W. Bush administration energy policy advisor Bob McNally noted, "This is the first time since 1930 and '31 that a massive negative demand shock has coincided with a supply shock;" in that case it was the Smoot–Hawley Tariff Act precipitating a collapse in international trade during the Great Depression, coinciding with discovery of the East Texas Oil Field during the Texas oil boom. Fears of the Russian–Saudi Arabian oil price war caused a plunge in U.S. stocks, and have had a particular impact on American producers of shale oil.Etymology
As the hashtag #BlackMonday trended on Twitter, news organizations such as the Associated Press, The Economist, and Yahoo Finance UK adopted the term on the day it occurred. While The Guardian initially referred to it as "Crash Monday", they also later referred to it as "The Black Monday of 2020" to distinguish it from the 1987 crash of the same name. The Associated Press also quoted an analyst of the Australian finance company OFX as saying, "A blend of shocks have sent the markets into a frenzy on what may only be described as 'Black Monday' ... A combination of a Russia vs. Saudi Arabia oil price war, a crash in equities, and escalations in coronavirus woes have created a killer cocktail to worsen last week's hangover."
no relation