Crude Expected to Collapse Monday as OPEC Meeting Delayed; Saudi, Russia Rift Widens

A delay in the virtual meeting between OPEC and its allies scheduled for Monday is likely to hit oil prices this week following last week’s record-setting comeback in crude oil prices, sources familiar with the matter told CNBC. The meeting will now “likely’ be held on Thursday, sources said.

Last week, President Donald Trump said to CNBC that he expected Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman to announce a deal to cut production by up to 15 million barrels, and that he had spoken to both countries’ leaders.

That news was enough to chase the weaker shorts out of the market, fueling a 25% surge in U.S. crude oil on Thursday, producing its best day on record. It also gained another 12% on Friday.

Furthermore, the market finished the week with a 32% surge, breaking a 5-week losing streak and posting its best weekly performance ever, back to the contract’s inception in 1983.

Saudi, Russia Rift May Be Widening

Over the weekend, the dispute between Moscow and Saudi Arabia over who is to blame for plunging crude prices intensified.

Putin, speaking on Friday during a video conference with government officials and the heads of major Russian oil producers, said the first reason for the fall in prices was the impact of the coronavirus on demand.

“The second reason behind the collapse of prices is the withdrawal of our partners from Saudi Arabia from the OPEC+ deal, their production increase and information, which came out at the same time, about the readiness of our partners to even provide a discount for oil,” Putin said.

The Saudi Foreign Minister Prince Faisal bin Farhan Al Saud disputed Putin’s claims, saying Russia had withdrawn and that statements about the kingdom’s withdrawal from the OPEC+ deal was devoid of truth, state agency (SPA) reported on Saturday.

Saudi Arabia energy minister Prince Abdulaziz bin Salman also issued a statement Saturday saying comments from Russia’s energy minister Alexander Novak “were categorically false and contrary to fact.” The statement said the Saudi minister ‘expressed his surprise at the attempts to bring Saudi Arabia into hostilities against the shale oil industry.”

Oil Set to ‘Crater’ Monday

Given the delay in the OPEC meeting and rising tensions between Saudi Arabia and Russia, pessimism is expected to return to the crude oil markets on Monday.

“It’s probably going to crater,” Again Capital’s John Kilduff said. “There was a lot of optimism priced into oil Thursday and Friday. With this new Saudi, Russia spat, it doesn’t look like it’s going to come together.”