Over the years we have been talking about the fading strength and unity of OPEC, and this current virus has put a spotlight on the issue. Clearly the Russians have made it clear that they are not part of the OPEC Plus team, likely as Putin knows that the Russian economy is solid, at least for now. And by stepping back and allowing prices to fall, the Russians know that OPEC will continue to collapse. OPEC is on life support and the US, and Russian leaders have just pulled the plug.
The 1.5 million barrel per day cut proposed by OPEC, was to mirror the weakening economy but with the Russian rejection, oil prices could trade to 35 dollars per barrel or lower. Lower demand will drive prices lower and the key question now is will the US accelerating crude oil sales, taking market share from Venezuela and Iran.
The market now feels that disunity will force players to pump at will – flooding global market with cheap oil.