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Tehran, March. 15 (SENA) - After a breakdown in talks between the members of OPEC on curbing oil output, oil price experienced a 10-percent decline in last trading day of week. Since Russia refused to go along with Saudi Arabia and other allies to reduce oil production, the oil price plummeted, according to SENA news agency.

West Texas Intermediate crude, the US benchmark slid 10 percent, or $4.62 to settle at $41.28 a barrel. So the price in March 6, 2020 is the same as in April, 2016. Also, Brent crude fell by 9.4 percent, or $4.72, as low as $45.28 a barrel, returned to its price in 2017.

OPEC plus including Russia and non-OPEC members after meeting in Vienna announced that there will be further talks to stabilize oil market.

 “Yet despite the expectation that Russia was just trying to play coy with the market for maximum market effect, some resources say their resistance to production cuts is real,” Phill Flynn, senior energy analyst at Price Future Group in Chicago said in a statement.

While some believe that Russia’s insistence is a planned decision to decrease U.S. Shale oil, the United States is one of the kingpins of oil-producers who is not a member of OPEC or even OPEC+ and would benefit from disagreement between Saudi Arabia and Russia.

“Russia can live with $40 a barrel and it seems they are willing to stomach even lower prices in the short-term to see the industry consolidates”, said Edward Moya, OANDA senior market analyst. ”Russia’s endgame could be to gain market share in 2021 when global demand returns to normal. Russia might be willing to see some U.S. shale drillers go out of business and if OPEC eventually capitulates without them.”

Therefore, about 60% of U.S. shale oil hedged $55 a barrel by forwards and margins which keep investors safe for a while. So, only 15% of U.S. oil production might suffer from prices lower than $48 a barrel.

The failure of producers to agree on proposed new cuts of 1.5 million barrels a day caused the share price of U.S. oil companies to be down to the lowest in last 11 years.

The analysts believe that the oil market faces oversupply at this moment and considering the outbreak of Coronavirus which has already reduced the world economy growth, oil market crash is predictable. On the other hand, the lack of a deal between Russia and Saudi Arabia rises the oil crises risk and the vulnerability of oil based economies.

The plummet in the oil market leads the investors all over the world to invest in the gold market. This caused a 7-percent increase in gold price and it reached to the highest point in last 11 years. The price of gold in last week jumped to $1,700 per ounce which is the highest weekly growth after 2009.

Therefore, it seems the plunge of oil price affects the refining companies stocks in Iran’s capital market and respected indices turn negative. The other effect is the plummet in metal industries stocks in Iran’s capital market which has made these symbols the most effective in indices.

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