price cut

On 8 March 2020, Saudi Arabia initiated a price war on oil with Russia, which facilitated a 65% quarterly fall in the price of oil. The price war was triggered by a break-up in dialogue between the Organization of the Petroleum Exporting Countries (OPEC) and Russia over proposed oil-production cuts in the midst of the COVID-19 pandemic. Russia walked out of the agreement, leading to the fall of the OPEC+ alliance.
Prior to the beginning of the price war, oil prices had already fallen 30% since the start of 2020 due to a drop in demand. In the first few weeks of March, US oil prices fell by 34%, crude oil fell by 26%, and Brent oil fell by 24%. The price war was one of the major causes and effects of the ensuing 2020 stock market crash.
In early April 2020 and again in June 2020, Saudi Arabia and Russia agreed to oil production cuts. The price of oil became negative on 20 April. Though oil production can be slowed, it can not be stopped completely, and even the lowest possible production level resulted in greater supply than demand. As such, those holding oil futures became willing to pay to offload contracts for oil they expected to be unable to store, resulting in enormous profit.

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