We could be due for some shockingly low gas prices.
During a bout of OPEC+ negotiations, two oil giants, Russia and Saudi Arabia, engaged in a heated argument. Russia sparked the debate when they refused to join OPEC in lowering the production of oil. This call was made to meet the dropping demand for oil due to travel reductions caused by the coronavirus outbreak.
Saudi Arabia began threatening to boost its oil production to 12.3 million barrels a day via Saudi Aramco. Not only would a production of that scale be record-breaking, but it would completely flood the market with product, driving the cost of oil products down. Russia refused to back down, claiming that it would hike its own production by 500,000 barrels a day. Both countries are threatening to increase production as soon as the current OPEC deal expires on April 1.
Due to these tensions, crude oil recently hit its lowest price since 1991. Since oil is often held as a standard for economic health, such low prices could have rippling negative effects on the rest of the global economy. There is still hope for a compromise, however. Russia has stated that they are open to negotiating with OPEC again, though it would have to wait until another official meeting in May or June.
Russia’s Energy Minister Alexander Novak commented on renegotiation on Russian television. “I want to say that the door isn’t closed,” he said. “If needed, we have various tools, including reducing and increasing production, and new agreements can be reached.”