Oil Markets Fall as Trump Restricts Trips From Europe

Workers are seen at the damaged site of Saudi Aramco oil facility in Abqaiq Saudi Arabia

UAE is teaming up with Saudi to pump out extra flood of oil equal to 4% of world’s existing supply

Saudi Arabia will once more be the world's biggest producer of crude oil under plans announced Wednesday to further increase the Kingdom's output to a new record level.

The global benchmark was trading at USD34.07 for each barrel at 0550 GMT for a 4.8 percent drop, after it ended Wednesday at USD35.79 a barrel with a decrease of 3.7 percent.

West Texas Intermediate fell 1.7 percent to about $33 a barrel while Brent crude was off 1.7 percent at $36 a barrel.

U.S. crude oil plunged another 6% to $31 a barrel on Thursday after President Donald Trump announced the travel restrictions with Europe in a bid to contain the coronavirus pandemic.

"The Russian oil industry has a high-quality resource base and a sufficient margin of financial strength to remain competitive at any forecast price level, as well as maintain its market share", RIA Novosti quoted Novak as saying.

The travel restrictions, which do not apply to Britain, will go into effect Friday at midnight, Trump said. Brent was trading at roughly $36 a barrel in London, and WTI trading at about $33/Bbl in NY.

On Saturday, the day after the landmark deal between the group known as OPEC+ fell apart, Riyadh slashed prices for its crude to customers worldwide.

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Oil is down around 50% from highs reached in January. On the weekend, Saudi Arabia launched an all-out price war, raising production and cutting prices after Russian Federation refused to go along with a deep production cut. That encourages oil firms and traders to pump oil into storage - either on land or in tankers at sea - with an aim to sell it later at a profit.

Until Friday, Saudi Arabia, U.A.E. and Russian Federation had been part of a global coalition known as OPEC+, which for the past three years had restricted crude output to shore up prices against a relentless tide of American shale oil.

With demand falling sharply and output rising quickly, the market is facing a big surplus in April. "That will drive oil prices back up, and I think higher than it has in a long time". Moscow said that there was no point cutting output because it would likely be too little to compensate for the virus' impact on global demand.

As of Thursday, that price had rallied slightly in American markets to $31.35 a barrel, while European markets pegged the price at $34.03.

The oil market was taking the decision very negatively because of the expected impact on jet fuel demand, business activity and economic growth, said Bjoernar Tonhaugen, head of oil markets at energy consultant Rystad.

The dramatic dissolution of the Opec+ alliance saw crude prices plunge by the most since the 1991 Gulf War on Monday. Estimates for the scope of the glut vary.

Nevertheless, Russia's finance ministry says the country has enough resources to cover budget shortfalls for six to 10 years that could occur if oil is priced between $25-$30 a barrel.

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