Oil prices plunged 30% in early trading Sunday night after OPEC’s failure to strike a deal with its allies regarding production cuts caused Saudi Arabia to slash its prices and reportedly get set to ramp up production, leading to fears of an all-out price war.
“This has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic over production,” Again Capital’s John Kilduff said. “The Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch.”
After the initial drop the losses were pared somewhat, with each contract trading down slightly more than 21%.
On Saturday Saudi Arabia announced massive discounts to its official selling prices for April, and the…