Riyadh and Moscow engage in an oil war against a background of coronavirus

A view of the Abqaïq oil fields belonging to the Aramco company in Saudi Arabia. Fayez Nureldine / AFP

Text by: RFI Follow

While the coronavirus has reduced global economic activity and is causing oil prices to drop, Saudi Arabia and Russia have launched a merciless battle. Monday March 9, prices had experienced their worst fall in almost thirty years, plunging by almost 25%. Today, new aggressive announcements on the Saudi side, and provocative statements on the Russian side, are plunging prices again.

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Cornered, Saudi Arabia is playing the reverse card of its initial strategy: in order not to leave the field open to the Russians, Riyadh increases its production capacity. Daily production of an additional 3.5 million barrels was decided on Tuesday and Wednesday, for a record level of 13 million barrels per day.

Just last week, Saudi Arabia wanted to cut global oil production to keep prices at a certain level. But Russia, the world's second largest producer, prefers to see prices fall rather than lose its market share and has categorically refused this option, because reducing its production would indeed have left the way open for American shale oil.

Russia wants to attack American oil

Conversely, letting prices collapse is also a way for the Russians to attack the United States, which became world oil leaders five years ago, but at the cost of very heavy borrowing, which it s is now to reimburse.

Vladimir Putin therefore poses as a chess player, and says he is " certain " that the Russian economy will come out " very strengthened " from this sequence.

It must be said that Russia has comfortable financial reserves, with a sovereign fund planned precisely to cope, over time, with a drop in oil prices.

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  • Economy
  • Oil
  • United States
  • Saudi Arabia
  • Russia

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