Stock markets in the Middle East collapsed on Sunday 8 March on fears of an oil price war sparked by Saudi Arabia's response to Russia's rejection of proposed output cuts to deal with a global collapse in demand in the wake of the spread of coronavirus.
Opec had proposed the cuts particularly in light of the collapse in demand from China, as the world's second biggest economy slowed significantly in February in the wake of measures to combat coronavirus. Projections are for big hits to developed economies in the first and second quarters of 2020.
This morning the price of Brent crude fell to $32 a barrel. On Friday the price was nudging $50.
We now convene at a time when the outbreak of Covid-19 has had a pronounced adverse impact on economic and oil demand forecasts in 2020"
Yet, according to the Financial Times, Russia's rejection of the proposals mean that Saudi Arabia now intends to pump more than 10 million bpd while also offering discounts of up to 20% in key markets "in an apparent attempt to punish Russia".
The so called "Premier Market" in Kuwait was suspended on Sunday after the index fell more than 10%.
"Based on clause 9-26-2 of the Bourse Kuwait Rulebook, trading in the 'Premier' Market has been suspended until the end of today's trading session due to the 10% decrease of the Premier index," the exchange said in a statement in the morning of 8 March.
"The Closing Auction session has also been suspended. Suspension of trading in the 'Premier' market does not affect trading on the 'Main' Market. Only a 10% decrease in that market's index can lead to full day suspension of trading in the 'Main' Market."
In Saudi Arabia, the Tadawul All Share index dropped more than 8%, while Saudi Aramco saw its share price fall blow that achieved when it launched its IPO on 11 December 2019. Bloomberg described the development as a "blow" to the country's efforts to diversify its economy.
On 5 March, at the opening of the 178th (Extraordinary) Meeting of the Opec Conference, the chairman's statement read in part: "We now convene at a time when the outbreak of Covid-19 has had a pronounced adverse impact on economic and oil demand forecasts in 2020, particularly in the first and second quarters."
Subsequently, Opec stated: "Heads of Delegation of the Opec Conference held further consultations and decided to recommend extending the duration of the proposed 1.5 million barrel per day additional adjustment until the end of 2020, instead of 30th of June 2020."
Commenting on the fall in oil prices, Artur Baluszynski, head of research at Henderson Rowe, said: "With Russia walking out on OPEC, oil prices are very likely to visit the 2016 lows. Russia is willing to sacrifice its short-term economic wellbeing for longer term geopolitical goals of weakening Saudi Arabia and debt addicted US shale producers. Oil and mining heavy indices such as FTSE 100, already weakened by the coronavirus, are massively exposed.
A version of this article was first published by InvestmentEurope