“After Russia walked out of the meeting last week, Saudi Arabia announced it would produce more oil and lower its prices, especially to Asia, which it hopes will entice China to buy more. This policy is logical…[however] coming immediately after Russia’s refusal to cut and amid the coronavirus fears, the new Saudi policy was seen solely as a hostile reaction to Russia’s actions. In other words, the market took what would have been a reasonable policy on its own and saw the start of a price war. That instilled fears of a prolonged problem.”
-Ellen Wald analyzes the crash in oil prices and comments that while the Saudi decision to increase production makes sense and will likely act as a stimulus package for the Chinese economy, the timing has led to concerns of a prolonged problem. [Barron’s]
