'Oil Price Crash' Gulf Oil-Producing Countries' Stock Markets Start with Sharp Decline

A photo of the Balal oil field drilling platform in Qatar's territorial waters in the Gulf, taken on May 16, 2004.
[Image source=Yonhap News]

[Asia Economy Reporter Jeong Dong-hoon] As oil prices plummeted due to Saudi Arabia's aggressive production increase strategy, Gulf region stock markets also fell sharply immediately after opening on the 9th (local time).

At 10 a.m. (local time) that day, the Dubai stock market in the United Arab Emirates (UAE) dropped 8.7% compared to the previous trading day, and the Abu Dhabi stock market fell 7.7%. The Kuwait stock market, which was halted after a 10% drop during trading the previous day, also plunged 10% within 30 minutes of opening, resulting in a suspension of trading for two consecutive days.

The Saudi Riyadh stock market (Tadawul), which had fallen 8.3% on the previous trading day (the 8th), was down 9.2% as of 10 a.m. on the 9th. Saudi state-owned oil company Aramco fell 10% at market open on the 9th, triggering a temporary trading halt according to regulations. Aramco's stock price dropped to 30 riyals, below the IPO price of 32 riyals (approximately 10,259 KRW), marking the lowest since its Tadawul listing in December last year.

The Organization of the Petroleum Exporting Countries (OPEC) and 10 major oil-producing countries including Russia discussed additional production cuts on the 6th to address the decline in oil demand caused by the spread of the novel coronavirus (COVID-19), but negotiations broke down due to Russia's opposition.

In response, Saudi Arabia, the world's largest oil exporter, announced it would aggressively secure market share by significantly lowering official crude oil selling prices and increasing production from the current 9.7 million barrels per day to over 10 million barrels per day.

Following Saudi Arabia's aggressive production increase policy, the price of May Brent crude oil fell to $31.02 per barrel, down 31.5%, on the London ICE Futures Exchange around 7 a.m. (Korean time) on the 9th. This is the lowest since February 12, 2016, and the largest intraday drop since January 17, 1991, during the Gulf War. West Texas Intermediate (WTI) crude oil also dropped to $27.34 per barrel around 1:28 p.m. that day, showing a 34% decline.

This content was produced with the assistance of AI translation services.