Oil prices have dropped sharply this morning as Saudi Arabia hinted that a proposed cut in output could be smaller than expected.
International standard Brent Crude fell 4.9 per cent bringing the price to $58.71 per barrel.
Oil producers’ cartel Opec is meeting today in Vienna in order to decide on a possible cut in oil production alongside non-Opec producers including Russia.
However, markets tumbled this morning as Saudi energy minister Khalid al-Falih said that the group would be content if production was cut by just 1m barrels per day, below estimates ranging up to 1.4m.
“The major oil producers must strike a balance in terms of price, as they want to put a floor under the market, but at the same time, if prices rally too much it could hurt demand, and vex President Trump,” said David Madden, an analyst at CMC Markets.
“Overall, this shows the weak momentum in the market right now and it has clearly not been helped by what has happened over night [...] with the sell-off in stocks and weakness in bond yields,” Saxo Bank senior manager Ole Hansen told Reuters.
“But [Opec] know how to handle markets. They might be talking it down and then delivering a sucker-punch a bit later, that could also be the outcome,” he added.
Oil prices have been dropping to year-lows in recent weeks as investors react to increased production from the US and Russia.