The United States plans to send a special energy envoy to Saudi Arabia to work with the kingdom on stabilizing the global oil market, USA officials said on Friday.
The price of a barrel of Brent crude oil - which is measure most often used - has fallen by around 60% since the beginning of the year.
The demand destruction from the coronavirus know as COVID-19 comes as the oil market contends with the unexpected price war that erupted between producers Russian Federation and Saudi Arabia, effectively ending an OPEC+ alliance and flooding the market with barrels. "Medium-term, the impact of such policies will depend on their political viability given the upcoming presidential election", Goldman Sachs said in the note issued on Thursday.
West Texas Intermediate (WTI), the New York-traded benchmark for United States crude prices, settled down $3.28, or almost 13 percent, on Friday at $22.63 per barrel.
For More of This and Other Stories, Grab Your Copy of the Standard Newspaper. The price war is a "lose-lose strategy" for the Saudis and Russian Federation, analysts at MUFG Bank Ltd. said in a note, with the fiscal and revenue outlook for both countries challenging if crude holds below $40 for a protracted period.
Stocks nosedive on Wall Street
The S&P 500 lost 324.89 points, or 11.98%, to 2,386.13 and the Nasdaq Composite dropped 970.28 points, or 12.32%, to 6,904.59. Monday's trading halt marks the third time since the coronavirus outbreak that US markets have paused activity.
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U.S. crude prices were also supported by the country's plans to buy crude for stockpiling after the U.S. Department of Energy said it would buy up to 30 million barrels of crude oil for the Strategic Petroleum Reserve by the end of June.
Tumbling demand due to the coronavirus outbreak combined with the collapse of the OPEC+ deal to curb production is expected to bring in a wave of supply starting April 1.
Brent crude futures fell US$1.84 or 6.8 per cent to US$25.14 a barrel by 10.15pm GMT.
"I would say it's very bad for Saudi Arabia", he said. And the head of the American Petroleum Institute, Mike Sommers, also has encouraged the president to engage with Saudi Arabia and Russian Federation to ensure markets aren't oversupplied.