Oil prices plunge more than 30 percent amid Russia-Saudi Arabia price fight over coronavirus – By Paul Takahashi (Houston Chronicle) / March 9 2020
Oil prices plunged more than 30 percent Monday morning, the largest decline in nearly three decades, after Russia and Saudi Arabia said they would increase production amid declining demand caused by the novel coronavirus.
Brent crude fell nearly 23 percent to $31.02 while West Texas Intermediate crude fell 34 percent to $27.34 as of about 10 a.m. Monday, the biggest same-day loss since the first Gulf War in January 1991.
The crash will have sweeping ramifications for Houston and the U.S. energy industry, hitting energy giants from Chevron and Exxon Mobil to small shale drillers in West Texas. Energy companies can make a profit at $50 a barrel oil, but few can survive $30 a barrel oil without lowering production and laying off workers.
“Sustained prices below $40 per barrel would trigger a new wave of brutal cost cutting,” Fraser McKay, Wood Mackenzie’s head of upstream analysis, said in a statement. “Discretionary spend would be slashed, including buybacks and exploration. … Unsanctioned conventional projects will also be delayed, and in-fill, maintenance and other spend categories scaled-back.”
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