- Saudi Aramco said Wednesday it will boost production to 13 million barrels a day from 12 million, while Abu Dhabi National co. said it will increase output to 4 million barrels per day in April.
- The increased production further escalated a global price war between OPEC and its allies.
- Brent crude fell 3.6% to $US35.87 per barrel at 8:40 a.m. in New York, while West Texas Intermediate crude slipped 3.7% to $US33.08 per barrel.
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Oil prices fell on Wednesday after major producers in Saudi Arabia and the United Arab Emirates vowed to boost production, escalating a global price war between OPEC and its allies.
Saudi Aramco said Wednesday that it will raise capacity to 13 million barrels a day from 12 million, after announcing that it would produce a record 12.3 million barrels a day in April. In addition, Abu Dhabi National Oil Co. said Wednesday that it will raise production to 4 million barrels per day in April.
Brent crude fell 3.6% to $US35.87 per barrel at 8:40 a.m. in New York, while West Texas Intermediate crude slipped 3.7% to $US33.08 per barrel. Oil prices gained as much as 11% Tuesday following a sharp drop a day earlier.
The increases in output raise tensions amid a global oil price war that’s unfolded in recent days. Now, Saudi Arabia, UAE, and Russia have all either raised production or threatened to boost output, further escalating the situation. Iraq and Nigeria have also said they’d increase crude shipments next month, Bloomberg reported.
“Oil’s supply-demand dynamics still point to a bias for weakness, as Saudi Arabia and Russia engage in a price war that threatens to push global markets into oversupplied conditions, at a time when global demand is being eroded by the coronavirus outbreak,” Han Tan, an analyst at FXTM, told Markets Insider in an email.
The price war has put additional pressure on the US shale industry and weighed on markets already whiplashing on concerns that the coronavirus outbreak will damage the economy. To stimulate the US economy, President Trump pitched a 0% payroll tax through November, as well as help for sectors impacted by the virus, including shale oil and gas – some Republican Senators suggested a federal bailout for the industry.
Investor confidence fell, however, when Trump failed to appear at a White House briefing on the coronavirus outbreak on Tuesday, after earlier saying that he would unveil an economic stimulus package at a news conference.