Prices at the pump have taken a tumble in Norfolk and the United Kingdom after a spat between Russian Federation and Saudi Arabia sent them into a downward spiral.
USA crude prices fell 29 percent on the week, recording their biggest weekly loss in nearly 30 years, as the world's top oil producers struggled to cope with the demand destruction caused by the novel coronavirus pandemic.
Oil has clawed back some losses even as traders brace for the market rout to continue below $20 a barrel, according to a Bloomberg survey.
Prices of the WTI are fading the initial move to the area above the $28.00 mark per barrel and have returned to the $24.00 neighbourhood at the time of writing, or daily lows. While Saudi Aramco said it will cut domestic refining to free up more crude for export, analysts at MUFG Bank Ltd. said the price war is a "lose-lose strategy" for the kingdom and Russian Federation, with the fiscal and revenue outlook for both countries challenging if crude holds below $40 for a protracted period. "It would stave off a total oil industry meltdown".
Brent crude futures had fallen $1.54, or 5.7 per cent, to $25.44 a barrel by 1004 GMT. Most stations in Regina are selling gas for 76.9¢ per litre, when just weeks ago prices were in the $1.00 per litre range.
Demand is expected to fall by more than 10 million barrels per day (bpd), or about 10 per cent of daily global crude consumption, said Giovanni Serio, head of research at Vitol, the world's biggest oil trader.
Oversupply is so extreme that regulators in Texas considered curbing production there for the first time in almost 50 years. "Unless somebody intervenes, no oil producer benefits from the current environment".
The Trump administration is considering a diplomatic push to get Saudi Arabia to close its taps and using the threat of sanctions on Russian Federation to force them to reduce output, the Wall Street Journal reported, quoting unidentified sources.
-With assistance from Dan Murtaugh.