A pact between the Organization of petroleum exporting countries and other producers, including Russia (OPEC), to reduce oil production to support prices, collapsed earlier this month and rocked global oil prices. “This is an unprecedented agreement, because it`s not just between Opec and Opec… but also the world`s largest supplier, the United States and other G20 countries that have agreed to support the agreement, both in terms of reducing production and using some of the surface supply, by storing it,” said Sandy Fielden, director of Oil Research for the Morningstar research company, the BBC. Nevertheless, the meeting seems at least a start to address the most serious problem facing the oil industry and OPEC countries in decades. The decision to reduce could lead to growing tension between cartel members and the United States. According to the initial agreement reached on 12 April by the joint producer group OPEC Plus, production was expected to increase gradually after June. On March 8, 2020, Saudi Arabia launched a price war with Russia, which facilitated a quarterly drop of 65% in the price of oil.  In the first weeks of March, U.S. oil prices fell by 34%, crude oil by 26% and Brent oil by 24%.   The price war was triggered by a breakdown in the dialogue between the Organization of the Petroleum Exporting Countries (OPEC) and Russia over planned oil production cuts in the midst of the COVID 19 pandemic.  Russia left the agreement, which led to the downfall of the OPEC alliance.
Oil prices had already fallen by 30% since the beginning of the year due to a drop in demand.  The fight for awards is one of the main causes and impact of the global stock market crash that followed.  “By the grace of Allah, and then with wise leadership, continuous efforts and ongoing conversations since the beginning of Friday, we now announce the conclusion of the historic agreement to reduce the production of OPEC members by about 10 million barrels of oil per day from May 1, 2020,” Dr. al-Fadhel wrote in a tweet. Before the opening on March 9, 2020 (Monday), the Dow Jones Industrial Average Futures market fell by more than 1,300 points and erupted due to a combination of coronavirus concerns and the oil price war.  On Monday, March 9, 2020, global stock markets experienced a significant drop due to a combination of panic over the COVID 19 pandemic and the price fight between Saudi Arabia and Russia. The Dow Jones fell above 2,000 points or 7.8%, exceeded the futures market forecasts and became the biggest loss of points in its history.  Other stock markets were also affected: the S-P 500 contracted by 7.6% and the NASDAQ Composite by 7.2%.