Opening the Oil Floodgates
CBJ — The oil war between Russia and Saudi Arabia continues to escalate on word that the Saudi’s state-run oil giant Saudi Aramco plans to increase its crude production to 12.3 million barrels a day next month. If it happens, that number would represent a record amount.
The move is in retaliation to Russia’s refusal to cooperate on cutting production along with members of OPEC.
The ongoing oil war led to a 25% plunge in price of crude on Monday, marking the biggest one-day decline in decades. Prices dipped by about 25% during the 1991 Gulf War, but that happened over two weeks — not one day.
A barrel of oil was selling for as low as $27 in some instances.
The lower oil prices come as there’s less demand for air travel amid the spread of COVID-19 around the world, further depressing prices.
All of this is bad news for the Canadian economy, but drivers will certainly like the short-term effects with prices at the gas pumps dropping drastically.