RIYADH, Saudi Arabia (NBC) – The crude oil price plunged over 20% in early trading on Monday following top oil exporter Saudi Arabia’s decision to slash its official selling price and step up production. The drop was the biggest percentage fall since 1991.
The decision to slash prices was made after a deal between the Organization of the Petroleum Exporting Countries, or OPEC, and its allies, led by Russia, collapsed in Vienna.
On March 5, OPEC recommended additional production cuts of 1.5 million barrels per day from the beginning of next month until the end of the year.
The meeting between OPEC and its partner countries, known as OPEC Plus, concluded with no deal on additional production cuts on March 6.
Amber Hill Capital Limited analyst Jackson Wong explained, “The breakdown of the talks between Russia and the OPEC really surprised by a lot of investors because most of the investors were expecting some kind of deal would be made and now, the oil prices, because of the negative news, the oil prices dropped significantly over 30%, from last Friday until today, and that had a lot of people worried that that may trigger another wave of flight to safety movement.”
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