As Oil Prices Plummet, Russia and Saudi Arabia Dig in for a Long Fight

Mar 18, 2020 | 10:00 GMT

A photo of a pump jack extracting crude oil from a snow-covered well located near Surgut, Russia.

A pump jack extracts crude oil from a well near Surgut, Russia. 

(Alexei Andronov\TASS via Getty Images)

Despite mounting fears of coronavirus-related drops in global oil demand, Saudi Arabia recently signaled its intent to flood the market with even more discounted exports following Russia's rejection of proposed OPEC+ production cuts. In doing so, Riyadh is hoping to force Moscow back to the negotiating table, though such a gamble is almost sure to backfire -- and badly. For one, Russia has long been wary of shrinking its oil output for fear of also shrinking its market share, and is thus unlikely to quickly cave to Saudi Arabia's demands. And compared with Riyadh, Moscow also has more cash reserves to ride out a period of low prices. Saudi Arabia's oil-dependent economy, on the other hand, will be among those hardest hit from the very price cuts to it's now willingly helping to exacerbate...