Russia suspects a cartel agreement was behind Monday’s massive plunge in global oil prices and suggests switching to take-or-pay contracts in the global oil trade, the Deputy Chairman of the country’s Security Council Dmitry Medvedev has said, according to Lenta.ru.
“What we see with regard to oil futures contracts is very reminiscent of a cartel agreement,” he wrote on his Facebook page.
“This situation should become a subject of a most careful analysis, because it undermines the recovery of the global economy. Possibly, principles of oil trade might be changed. For example, with regard to the experience of signing long-term energy contracts, using the take or pay principle,” he said.
Medvedev’s secretariat explained that “due to telecommunications problems, only a part of the comment was originally posted.” Besides, “the text was edited when the final version was published.”
U.S. oil prices turned negative for the first time on record on Monday after oil producers ran out of space to store the oversupply of crude left by the coronavirus crisis, triggering an historic market collapse which left oil traders reeling.
The price of U.S. crude oil crashed from $18 a barrel to -$38 in a matter of hours, as rising stockpiles of crude threatened to overwhelm storage facilities and forced oil producers to pay buyers to take the barrels they could not store.
The market crash underlined the impact of the coronavirus outbreak on oil demand as the global economy slumps.
On Tuesday prices rebounded above zero, with the U.S. benchmark West Texas Intermediate for May changing hands at $1.10 a barrel after closing at -$37.63 in New York on Monday.