hero image

Opec and Russia have been in discussions targeted at deciding whether or not it was necessary to cut down on oil production. Coronavirus has become a matter of great concern to governments around the globe and businesses as well.

Regulation plans bear no results

The two parties had witnessed the effects of the deadly virus to get to the point of holding the discussions. The talks have been cut short before the sides could reach a deal, and that has resulted in a major drop in crude oil prices. The 9 percent drop is the largest fall for over three years.

Russian has been collaborating with Opec and Saudi Arabia since 2016, but this time around, it has turned down a deal. The plan was for the three parties to agree on calls to cut down on about 4 percent crude oil output globally. In this regard, the idea was to cut down on new output. Russia walked out of the deal, frustrating the efforts of the others. This would have been successful if all the parties have agreed to the call.

The collapse of talks and the effects

Reports indicate that issues arose at that point where aviation and transport demand brought about changes that pushed oil prices down. It got to a point where a barrel could go for about $45.There are concerns that the disagreement between the parties could result in some adverse effects.

 There are fears that some of the targets oil producers around the world may be considering opening their taps in the face of the decline of the global oil demand. Top companies such as ExxonMobil and BP might incur huge losses, according to analysts. The oil-dependent economies such as Texas might land it trouble by being forced to squeeze their budgets.

The other notable point is that the alliance between Russian and Saudi Arabia has been compromised this time around. This alliance had a massive role in uplifting the influence of Moscow in the Middle East. Business analysts haven’t understood the reason behind Moscow’s decision to walk out on the plan but admit the effects must be felt.