The price of oil has evidently collapsed this year, with Saudi Aramco share price falling to more than 30%. West Texas Intermediate fell more than 10% and Brent crude closed Friday at a multi-year low of $45.27 at a 9% reduction.

Graph: Oil crash, March 2020

In fact, some analysts point out that oil has crashed, down 50% this year and down today to a near all-time low since 2007. Other analysts believe that with declining demand and an opportunity for increasing supply, prices will likely continue to fall.

On 8th March, Saudi Aramco’s share price dipped for its first time below the Initial Public Offer (IPO) price. A move attributed to the submerging of RussiaOPEC deal on 6th March. During the initial listing of IPO, share prices retailed at 32 riyals and on Sunday the price index fell to 30.90 Riyals.

The decline in share price reciprocates to 6.36 percent a move that could have been fueled by Russia and OPEC deal going soar.

Having been nationalized for five decades, the price drop on Saudi Aramco share price was a dramatic change to the oil industry. Top of the Arabian prince agenda was to revamp Saudi Arabia’s economy by 2030 in readiness for the post-oil episode in both the local and global economies.

The Saudi Aramco company is valued at $1 trillion by reputable financial institutions and it plays a huge role in the Gulf oil market. Saudi Arabian government owns the majority of the Saudi Aramco share price in the oil company and it is highly involved in its dealings and operations.

Saudi Aramco share price declines

According to a conference on 6th March, Russia and OPEC failed to come into agreement on the cuts in production costs of oil to tame the falling prices attributed to the novel Coronavirus outbreak in the region.
The price of crude oil plunged as a result of a move that is not new in the stock markets following the outbreak of Coronavirus.

According to HIS Market’s limited analysis, with decreased oil demands in the global market, oil prices are set to hit the lowest prices in 20 years this quarter.

Cuts in output for around 5 million barrels daily

During the conference, the 14 OPEC member states were agitating for cuts in output for around 5 million barrels daily with efforts to stabilize oil prices a move that saw reluctance from Russia leading to the adjournment of the meeting.

In order to keep government functions running smoothly, Saudi Arabia needs to keep oil prices at $83.60 per barrel, on the contrary, Russia demands just $42.40 per barrel leading to a conflict of interests among the major oil-producing partners.

The stock exchange market in Saudi Arabia received a major blow as investors took a safe haven from volatility in the market due to the coronavirus menace. Other exchanges in the United Arab Emirates were not spared either in the 7.7% market dip.

Decentralized beauty of BTC

This brings us to the matter of Bitcoin. OPEC, being centralized, failed to make important supply reductions, thus revealing the beauty of Bitcoin. With the in-built halving, rewards for miners will decrease by half. In turn, reduction in mining rewards will reduce supply, even as demand for the coin is increasing.

Due to the decentralized ecosystem, the currency cannot be tampered with. And we heartily concur that “inflation controls allow for genuine stability, unlike corporate or political confusion“.

Featured image credits: Pixabay