Saudi Arabia and Russia announced large supply boosts, escalating the country’s price feud even as the coronavirus squeezes demand, which supported oil prices a day after their biggest crash in almost 30 years, Bloomberg reported.
Brent futures traded near $35 a barrel in London, shedding about $1.50 in the minutes after state-run Saudi Aramco said it will provide customers with 12.3 million barrels a day in April, exceeding the kingdom’s maximum rate of production. Russia could add about 500,000 barrels a day in the near future, according to Energy Minister Alexander Novak.
Yet Brent remained 4% higher on the day, bouncing after losing a quarter of its value on Monday — the biggest plunge since the 1991 Gulf War — after the pact between Riyadh and Moscow to manage supplies collapsed in acrimony.
Saudi Arabia slashed its official crude pricing over the weekend and is threatening to raise output to record levels, while Russia’s largest producer said it will ramp up production next month. The gush of new supply is happening as the coronavirus pummels global consumption, with the International Energy Agency warning crude demand will drop this year for the first time since the worldwide financial crisis.
“Welcome to the free market,” said Bob McNally, president of Rapidan Energy Advisers and a former U.S. National Security Council staffer. “The world is about to learn very swiftly how important a swing producer is for stability, not only for the global oil market but the broader economy and geopolitics.”
Brent for May settlement advanced 4.9% to $35.74 a barrel on the London-based ICE Futures Europe exchange after plummeting 24% on Monday as of 9:03 a.m. local time.
West Texas Intermediate crude for April delivery rose 5.1% to $32.71 a barrel on the New York Mercantile Exchange. It crashed by more than $10 a barrel on Monday to end at $31.13, the lowest since early 2016.