“Any agreement on the extension of the cuts is conditional on countries that failed to fully comply with their cuts in May compensate for their overproduction,” the source said. On March 8, 2020, Saudi Arabia launched a price war with Russia, which facilitated a quarterly drop of 65% in the price of oil.  In the first weeks of March, U.S. oil prices fell by 34%, crude oil by 26% and Brent oil by 24%.   The price war was triggered by a breakdown in the dialogue between the Organization of the Petroleum Exporting Countries (OPEC) and Russia over planned oil production cuts in the midst of the COVID 19 pandemic.  Russia left the agreement, which led to the downfall of the OPEC alliance. Oil prices had already fallen by 30% since the beginning of the year due to a drop in demand.  The fight for awards is one of the main causes and impact of the global stock market crash that followed.  However, there has not yet been an agreement on whether an OPEC production meeting should take place on Thursday, with the main obstacle being dealing with countries that have not achieved the deep supply reductions required under the existing pact, he said.
Later, on 3 April, the Saudi foreign and energy ministers issued statements criticizing Putin and accusing Russia of not participating in the OPEC agreement.  Following the COVID 19 pandemic, plant production and transportation declined, which also reduced aggregate oil demand and drove down oil prices.  February 15, 2020, the International Energy Agency forecast that demand growth would fall to its lowest level since 2011, with growth of 325,000 barrels per day over the full year, to 825,000 barrels per day and a decline in consumption of 435,000 barrels per day in the first quarter.  Although global oil demand has declined, a drop in demand in Chinese markets, the largest since 2008, triggered an OPEC summit on March 5, 2020 in Vienna. At the summit, OPEC agreed to further reduce oil production by 1.5 million barrels per day by the second quarter of the year (an overall production cut of 3.6 million bpd from the original 2016 agreement), and the group is expected to review that policy on June 9 at its next meeting.  OPEC has asked Russia and other non-OPEC members to comply with OPEC`s decision.  On 6 March 2020, Russia rejected the request, marking the end of the unofficial partnership, as oil prices fell by 10% after the announcement.  The first OPEC source stated that a previous meeting on 4 June was also conditional on compliance and that discussions were now focused on the implementation of criteria for countries that have not fully complied with oil cuts and how to compensate for their overproduction in the coming months.
LONDON (Bloomberg) – Saudi Arabia and Russia ended a devastating oil price war on Thursday and agreed with other members of the OPEC alliance to cut production to free the market from a pandemic collapse.