Iran: OPEC needs to restore position
Despite sliding demand for crude due to the coronavirus, Riyadh made plans to ramp up output in April after Moscow balked at OPEC's proposal last week for a further steep production cut. Saudi Arabia also cut its official crude selling price.
Russia, one of the world's top producers alongside Saudi Arabia and the United States, also said it could lift output and that it could cope with low oil prices for six to 10 years.
Brent crude futures were down by more than 27% at $35.5 a barrel by 1340 GMT, after early dropping by as much as 31% to $31.02, their lowest since Feb. 12, 2016.
US West Texas Intermediate (WTI) crude fell by more than 27%, to $32.30 a barrel, after initially falling 33% to $27.34, also the lowest since Feb. 12, 2016.
The US benchmark's biggest decline on record was in 1991 when it also fell by a third.
"The timing of this lower price environment should be limited to a few months unless this whole virus impact on global market and consumer confidence triggers the next recession," said Keith Barnett, senior vice president for strategic analysis at ARM Energy in Houston.
The disintegration of the grouping dubbed OPEC+, made up of the Organization of the Petroleum Exporting Countries plus Russia and other several oil producers, ends more than three years of cooperation to support the market.
Saudi Arabia plans to boost its crude output above 10 million barrels per day in April after the current deal to curb production expires at the end of March, two sources said on Sunday.
The kingdom has been producing around 9.7 million bpd in recent months.
Saudi Arabia, Russia, and other major producers last battled for market share in 2014 in a bid to put a squeeze on production from the United States, which has not joined any output limiting pacts and which is now the world's biggest producer of crude.
Saudi Arabia over the weekend cut its official selling prices for April for all crude grades to all destinations by between $6 and $8 a barrel.
Iranian Oil Minister Bijan Namdar Zanganeh told Bloomberg in an interview published on Monday that a dive in the prices that has taken place since the strained OPEC meeting with allied producers on Friday would be reversed soon.
Zanganeh said there was a need for OPEC to restore its position as a key player in the global oil trade and not rely too much on non-OPEC members.
"I believe it's a necessity for (OPEC) members to rely on themselves like before and not decide something subject to the acceptance of the non-OPEC countries,” he said.
However, he said that the OPEC would still need the contribution of oil producers like Russia to create a balance in a market which has already faced a supply glut and a record low demand as a result of the spread of coronavirus.
“A wise man told me that life is full of compromises. And we hope to witness one of these compromises with Russia ... my experience tells me that it will happen very soon," said Zanganeh.
China's efforts to curtail the coronavirus outbreak has disrupted the world's second-largest economy and curtailed shipments to the biggest oil importer. The virus has also spread to other major economies such as Italy and South Korea.
The International Energy Agency said on Monday oil demand was set to contract in 2020 for the first time since 2009. It cut its annual forecast by almost one million bpd and that the market would now contract by 90,000 bpd.
Major banks have cut their demand growth forecasts. Morgan Stanley predicted China would have zero demand growth in 2020, while Goldman Sachs sees a contraction of 150,000 bpd in global demand.
American multinational investment bank, Goldman Sachs, cut its forecast for Brent to $30 for the second and third quarters of 2020.
In other markets, the dollar was down sharply against the yen, Asian stock markets sharply lower, and gold rose to its highest since 2013 as investors fled to safe havens.
Chris Weafer, the director at Macro-Advisory consultancy, said Russia return to cooperating with OPEC by autumn if prices remained very low as President Vladimir Putin "will be reluctant to run down financial reserves too far to fund an expanding deficit".
Reuters and Press TV contributed to this story.