An oil pumpjack
An oil pumpjack

  • Oil markets tumbled the most in decades overnight on Sunday. The sell-off was fueled by sinking demand due to coronavirus concerns.
  • This was the biggest drop since the Gulf War in 1991, and it comes amid the collapse of a crucial OPEC+ alliance, which in turn triggered an all-out price war.
  • Visit Business Insider's homepage for more stories.

Oil futures tumbled 31% in a matter of seconds overnight on Sunday, their sharpest decline since the Gulf War in 1991. The losses are being fuelled by sinking demand due to coronavirus concerns, which has in turn sparked a series of price cuts.

By early Monday morning, Brent crude oil was still down almost 30% at $32 a barrel. 

Saudi Arabia slashed its prices by the most in at least 20 years over the weekend. A price-cut free-for-all has broken out globally following the collapse of an OPEC+ alliance last week. Talks broke down after Russia refused to meet Saudi Arabia's request for output cuts, which would boost prices.

Futures on the Dow Jones Industrial Average sank more than 900 points, while S&P 500 futures were hit with a 4% drop at open on Monday. Goldman Sachs analysts have warned that the price of oil could tumble even further, to $20 a barrel.

The drop follows an oil prices plunge on Friday amid concerns that coronavirus will slash demand for fuel. Prices sank as much as 11% - the most since 2014.

The latest development comes after OPEC warned on Thursday that it expects global oil demand to increase by 480,000 barrels per day this year - less than half its 1.1 million barrel-per-day estimate in December. In response, it recommended cutting output by 1.5 million BPD for the rest of this year.

The coronavirus outbreak that originated in Wuhan, China, has killed more than 3,800 people and infected more than 109,000. The virus, which causes a disease known as COVID-19, has spread to at least 105 other countries.

By early morning trading in Asia, markets were bleeding and the rand was down more than 3% to R16.16/$. It almost reached R17 earlier in the session:

It also reached R21.20 to the pound and R18.50 for euro early on Monday.

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