Oil price has taken a sharp dive lower today as Saudi Arabia’s deputy crown prince Mohammed bin Salman casted fresh doubts over recent oil freeze agreement.
Two oil giant, Saudi Arabia and Russia in February reached an agreement to freeze production at January levels in an effort led by Venezuela and Qatar. Lot other OPEC and non-OPEC members were expected to meet on April 17th in Doha, Qatar to finalize the initial agreement.
What spooked everyone is the very wordings that Gulf countries will agree to freeze production only if Iran and other countries join in.
He also casted doubts over the very existence of oil market in its current form citing that finite supplies, environmental concerns and alternative energy resources will threaten the very existence of oil market. So recent decision to float Saudi Aramco is aimed to create a supersized sovereign fund that would diversify the economy away from oil.
After the statement, oil is under heavy selling. WTI is down more than 2%, trading at $37.3/barrel at $2/barrel discount to Brent.
