Oil prices slipped in the early hours of the start of the trading week today.
The drop was due to significant scares on the future of crude in the coming weeks.
Following the postponement of the meeting between Saudi Arabia and Russia designed to clear doubts on the future of oil, it is only natural that the market would respond like this.
The delay heightened sentiments of fear and this has in turn led to the bears coming right back into the market. The delayed meeting accounts for the drop in oil prices seen today.
The core intentions of the meeting are to discuss output cuts. However, the conference has now been shifted to Thursday the 9th April.
Earlier today, Brent crude (LCoc1) sat at $30 per barrel. West Texas Immediate Crude (CLc1) fell to $33.87 per barrel. This is a drop of about 1.5%, only $2.64 off the session low.
Last week, the price of oil surged massively after U.S. president, Donald Trump, expressed hopes that an agreement will be reached in terms of production levels. However, the delay in the resolution has only caused the market to plummet.
The fallout between Saudi Arabia and Russia has its roots in the previous failure of the March talks. Each party finds the other guilty of the events that led to the deadlocked situation.
The Russian Sovereign Wealth Fund Chief has however, expressed certainty that an agreement will be reached soon. He stated in an interview that both countries are very close to striking a deal on the proposed cuts.
President Trump expects a coordinated cut in oil production of about 10%. This action will be the biggest coordinated reduction that has ever been seen.
President Trump has threatened that if an agreement is not reached, he might be forced to impose tariffs on crude imports should the need arise.
This measure would be in a bid to protect U.S. energy workers from an impending crash in oil prices. Should the war between Saudi Arabia and Russia continue, the President will be forced to play the tariff card.
According to him, Saudi Arabia delaying the release of the official selling price of their crude, which implies that they are not so eager to stop pushing cheap supplies into the market without first reaching a solid potential agreement.
Robert also went on to express that it is a clear sign that Saudi Arabia is hoping to cut production in May.
In all hope, the issue will be resolved on Friday, and both parties involved will come to a substantial agreement regarding the output cuts.
In the meantime, global oil markets remain highly volatile and might continue that way until the end of the trading week.