The oil market has posted its worst quarterly performance due to the global spread of COVID-19 and the emergence of a global price war at the same time.
Demand for oil has fallen off sharply as the global spread of COVID-19 has led to restrictions in traveling and the majority of people opting for social distancing till the situation returns to normal. Consequently, gas prices have been depressed as well.
Amid the fall in demand, the Organization of the Petroleum Exporting Countries and allies failed to agree on production cuts past March 31st. Both Saudi Arabia and Russia are preparing to increase the production starting on April 1st.
Saudi Arabia has announced that it will increase production to 12.3 million barrels per day in April, while Russia will be increasing its total production to 11.8 million barrels. As a result, there will a glut of oil in the market.
Amid the price wars and excessive production of oil by both Saudi Arabia and Russia, oil prices are expected to fall even further.