Live updates: U.S. markets dive, trading suspended after Trump’s coronavirus travel ban fails to calm investors - The Washington Post

Oil markets remain under siege as the price war between Russia and Saudi Arabia drives prices so low that many companies may not make it through a contraction.

Brent crude, the global benchmark, and West Texas Intermediate were both trading in the low $30s, which is about half of what most private oil companies need to make some profit.

“Saudi Arabia has played a crucial role in causing the massive price drop,” said John Kilduff of Again Capital. “The kingdom has gone from being the oil market caretaker to being a homewrecker.

“Saudi Arabia is engaging in marketplace war fare, pure and simple, not missing an opportunity to make matters worse for its oil producing rivals, Russia and U.S. operators,” he said.

Claudio Galimberti, the head of demand, refining and agriculture analytics at S&P Global Platts, said in a Wednesday analysis that he sees “a very deep contraction, particularly in the first half of the year.” He also assumes the pandemic to be over by August.

The oil war, which may lower gasoline and fuel prices in the short term, could decimate the U. S.shale oil industry very quickly, putting millions out of work across oil, trucking and service industries.

Occidental Petroleum is one of the hardest hit U.S. oil companies; its stock fell 18 percent Wednesday. Oxy, as it is known, has seen its market value shrivel since its acquisition of Anadarko Petroleum last year. Its market cap is now below $11 billion, compared with $50 billion before the acquisition.

Activist investors Carl Icahn is seeking to increase his 10 percent stake in the oil company and take control, according to the Wall Street Journal.

“Aside from its immediate, stunning impact on the financial markets, the recent 25% drop in crude oil prices may have longer-term implications,” said PIMCO portfolio manager Greg Sharenow in a note. “We expect crude oil to remain under $40 per barrel (bbl) for some time, with risks to fall materially lower should the production increases endure for multiple quarters. This will have repercussions for many industries, notably U.S. shale oil, and for consumers around the world.”

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