finance current event

2020 Russia-Saudi Arabia Oil Price War

PRESENTER: JINGJING XU

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SUMMARY

SUMMARY: 2020 Russia-Saudi Arabia Oil Price War ● Since the Organization of the Petroleum Exporting

Countries (OPEC) recently failed to reach a new agreement with Russia on limiting crude oil production. Then, Saudi Arabia, the world’s largest oil exporter, announced that it would lower its official oil prices, increase production from April and pursue more market share.

● The increasing supply of oil markets + the weak demand due to the impact of the coronavirus pandemic = international oil prices plummeted in panic

● In early March, U.S. oil prices fell by 34%, crude oil fell by 26%, and Brent crude oil fell by 24%

● Direct performance: the U.S. stock market triggered circuit breaker four times in ten days

Reasons to Choose this Topic

2020 Stock Market Crash

“Black Monday”

The biggest events affecting

the capital market in 2020

Globalization: Under the background that almost all industrial chains are linked to finance and capital markets, the chaos of finance and capital markets will eventually affect the real economy industry and trigger a full-scale economic crisis.

Reasons to Choose this Topic

The impact of this event on global capital markets,

economies, and institutions.

Analysis Hi!

Futures Market Data f rom CNN Business News

● Brent Crude Oil Futures: $35.45 per barrel, -22%

● US Oil Price: $33.15 per barrel, -20%

Stock Market - The U.S.

S&P 500 Dow Jones Industrial Average NASDAQ Composite

● Wall Street Journal - Market (March 9): Dow Jones Industrial Average fell 7.79% Nasdaq Composite Index fell 7.29% S&P 500 fell 7.6%

● Circuit Breaker Mechanism - four times in ten days

Copy f rom Yahoo Finance: https://finance.yahoo.com/

Stock Market (March 9, 2020) Stock Market Stock Market

FTSE 100 index (London, UK) -7.7% Tadawul All Share Index (Saudi Arabic) Fell more than 7%

CAC40 index (Paris, France) -8.39% Qatar stock market Fell more than 8%

DAX PERFORMANCE-INDEX (Frankfurt,

German)

-7.94% Egyptian stock market Fell more than 7%

FTSE Straits Times Index (Singapore) -6.03% B3 ( São Paulo, Brazil) Fell more than 10%

TSE/TYO (Tokyo, Japan) -5.61% S&P MERVAL Index (Buenos Aires,

Argentina)

Fell more than 13%

KRX (Seoul, South Korea) -4.19%

STOCK MARKET ANALYSIS ❏ The global stock markets have plummeted, and stock markets in many regions have

fallen at a record since the 2008 subprime mortgage crisis. ❏ From the above data, it can be seen that for countries that rely on energy production,

such as Brazil, Saudi Arabia, and other countries, the stock index has fallen more

sharply.

❏ The COVID-19 pandemic has directly impacted the profitability of the energy and

financial sectors. The impact of the epidemic on social production and life, from

industrial production to consumer goods expenditure, has led to a decline in demand.

❏ The epidemic and the oil war have exacerbated people’s panic about market instability.

❏ Measures such as interest rate cuts taken by central banks in the face of financial

market turmoil will also put pressure on the profitability of banks and other financial

institutions, further causing the overall trend of the stock market to decline.

❏ BLACK MONDAY!!!!!!

Foreign Exchange Market

Safe-haven currencies

such as the Euro, Yen

and Swiss franc rose

sharply.

The currencies of some

oil-producing countries

that are more affected by

oil prices have dropped

sharply against the US

dollar.

The Russian Central

Bank ban the purchase

of foreign exchange in

the Russian domestic

market within 30 days.

Economies Low oil prices are not only harmful to the economies of Russia and Saudi

Arabia, but also to the oil revenues of other oil-producing countries.

The decreasing price of oil will exacerbate the risks and political instability of the Middle East energy economy.

Shale oil: High production cost; Breakeven: $50

The low oil prices brought about by the 2020 oil price war will directly lead to a reduction in the income of US oil industry workers, weakened market competitiveness, and a reduction in domestic demand, which will cause a significant blow to the US economy.

OPEC: To ensure the stability of oil prices in the international oil market by eliminating

unnecessary price fluctuations.

Institutions

The trust of various countries in different international

organizations may decline, which is not conducive to the

cooperation of multiple countries in different fields in the future.

China–United States trade war COVID-19

2020 Oil Price War

Conclusion

References Defterios, J. (2020, March 09). Why oil prices are crashing and what it means. Retrieved September 13, 2020, from

https://www.cnn.com/2020/03/09/business/oil-price-crash-explainer/index.html

Journal, W. (n.d.). COMP | NASDAQ Composite Index Stock Prices and Charts - WSJ. Retrieved September 13, 2020, from

https://www.wsj.com/market-data/quotes/index/COMP

CAC Quote - CAC 40 Index. (n.d.). Retrieved September 13, 2020, from https://www.bloomberg.com/quote/CAC:IND

SASEIDX Quote - Tadawul All Share Index. (n.d.). Retrieved September 13, 2020, from

https://www.bloomberg.com/quote/SASEIDX:IND

Stanapedis, A. (2020, March 09). Russia Exchange Rate March 2020. Retrieved September 13, 2020, from

https://www.focus-economics.com/countries/russia/news/exchange-rate/ruble-slumps-at-2020-outset-as-coronavirus-fears-m

ount-and-oil

Russian central bank suspends forex purchases amid ruble depreciation. (n.d.). Retrieved September 13, 2020, from

http://www.xinhuanet.com/english/2020-03/09/c_138859180.htm

Jorge Guira Associate Professor of Law and Finance. (2020, September 06). Will American shale oil go bust? Retrieved September 13,

2020, from https://theconversation.com/will-american-shale-oil-go-bust-136988

Shale oil production may take years to recover, despite a short-term uptick. (n.d.). Retrieved September 13, 2020, from

https://www.worldoil.com/news/2020/6/24/shale-oil-production-may-take-years-to-recover-despite-a-short-term-uptick

References Contributors Jamie McGeever Reuters Paula Laier. (n.d.). Brazil stocks plunge 10%, central bank intervenes in FX to support real.

Retrieved September 13, 2020, from

https://www.nasdaq.com/articles/brazil-stocks-plunge-10-central-bank-intervenes-in-fx-to-support-real-2020-03-09

2020 stock market crash. (2020, September 09). Retrieved September 13, 2020, from

https://en.wikipedia.org/wiki/2020_stock_market_crash

Saudi Arabia Stock Market (TASI)1998-2020 Data: 2021-2022 Forecast: Quote: Chart. (n.d.). Retrieved September 13, 2020, from

https://tradingeconomics.com/saudi-arabia/stock-market

AS51 Quote - S&P/ASX 200 Index. (n.d.). Retrieved September 13, 2020, from https://www.bloomberg.com/quote/AS51:IND

U.S. Dollar Index (DXY). (n.d.). Retrieved September 13, 2020, from https://www.marketwatch.com/investing/index/dxy

2020 Russia–Saudi Arabia oil price war. (2020, August 18). Retrieved September 13, 2020, from

https://en.wikipedia.org/wiki/2020_Russia%E2%80%93Saudi_Arabia_oil_price_war

Person. (2020, March 16). Brazil Exchange Rate March 2020. Retrieved September 13, 2020, from

https://www.focus-economics.com/countries/brazil/news/exchange-rate/real-slumps-to-fresh-historic-low-in-mid-march-depreci

ation

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