Fears that the pandemic will destroy demand for oil also contributed to mixed oil prices. Credit: skeeze from Pixabay.

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Oil prices dropped below $30 per barrel on Tuesday, after rising as high as $31.25. Recession fears continue to cause fluctuations, as Saudi Arabia increases its output.

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According to Reuters, Brent crude was selling 0.5% lower than it opened, at $29.91 a barrel. US West Texas Intermediate (WTI) crude oil stood at $29.04 per barrel, after earlier gaining 4.7%.

US President Donald Trump said economic disruptions could lead the US into recession, as coronavirus continues to impact global stocks. The country also revealed plans to fill its Strategic Petroleum Reserve (SPR) with cheap oil.

AxiCorp chief markets strategist Stephen Innes told the news agency: “Those storage facilities are rapidly filling.

“If storage does fill, quashing that demand, oil prices are sure to collapse further, and the global markets will then have to hope that the dispute between Saudi Arabia and Russia is resolved before we reach that point of no return.”

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Meanwhile, Saudi Arabia and Russia continue to disagree on supply cuts proposed by the Organisation of the Petroleum Exporting Countries (OPEC). The suggested cut of 1.5 million barrels per day would have countered lower demand due to coronavirus. However, the countries could not agree on what share each would take, and oversupply fears have deepened.

Saudi Aramco chief executive Amin Nasser said: “In a nutshell, Saudi Aramco can sustain the very low price and can sustain it for a long time.

“For the production in May … I doubt it would be any different from next month.”

Coronavirus global impact

The worldwide Covid-19 death toll has increased to more than 7,154. Over 182,400 confirmed cases and 79,400 recoveries are reported, as of the end of 16 March.

Amid rising coronavirus deaths and cases globally, the World Health Organization (WHO) has recommended testing of all suspected cases.

Global coronavirus cases continue to surge, with Europe being considered as the current epicentre of the pandemic. Italy, Spain, France, Germany and Iran all reported more than 1,000 new cases on Tuesday.

Several countries, including Germany and Italy, have closed their borders. The French capital has started a lockdown, with Parisians told to stay home.