Russian President Vladimir Putin was singlehandedly behind Friday's 10% collapse in crude prices, Bloomberg news says.
As coronavirus spread, the Saudis hoped Moscow could be convinced to go along with further production cuts. But Putin insisted that shale producers should be made to share the pain.
OPEC+ proposed a deep production cut of 1.5M barrels/day, but Russia was unwilling to play ball. "The Kremlin had decided that propping up prices as the coronavirus ravaged energy demand would be a gift to the U.S. shale industry. The frackers had added millions of barrels of oil to the global market while Russian companies kept wells idle. Now it was time to squeeze the Americans."
“If you always give in to partners, you are no longer partners,” Rosneft spokesman Mikhail Leontiev - who is delighted by the breakup - said. “Let’s see how American shale exploration feels under these conditions.”
Prices will continue to fall until either Moscow or Riyadh call off the endurance contest, or North American massively curtails production, Bob McNally, a former National Security Council staffer says.