6 March 2020 Oil price war between Moscow and Riyadh increases European markets’ volatility

The pact between the Organization of the Petroleum Exporting Countries (OPEC) and Russia is falling apart after Moscow rejected Riyadh’s proposal to curb oil production to 1.5 million barrels per day, in response to the drastic decrease in global crude demand due to the coronavirus outbreak. OPEC member states and Russia have been cooperating together for years to curb production and maintain high stable oil prices, until Moscow rejected to further reduce its output in the last OPEC+ meeting held in Vienna on 6 March. Following this decision, both countries flooded the markets with oil, forcing prices to a severe downfall. Whether or not Russia and Saudi Arabia will be able to endure this price war remains unclear. Meanwhile, European markets have been severely hit, with oil and gas stocks plunging over 16% and causing major losses to business and bourses. In this climate of growing uncertainty, exacerbated by the effects of coronavirus, the European Central Bank announced long-term refinancing operations to provide markets with liquidity and mitigate European markets’ volatility, which still remains unstable.