Markets in panic mode as Saudi Arabia triggers a price war for oil; virus fears grow

Wall Street

U.S. stock futures steeply lower

Trading in the U.S. stock index futures suggests that Wall Street shares will open deep in the red on Monday, after Saudi Arabia triggered an oil price war with Russia and fears over the novel coronavirus mounted.

OPEC and its allies, including Russia, were supposed to agree to cuts of 1.5 million barrels per day during a meeting of the Organization of Petroleum Exporting Countries (OPEC) last week. Russia said it would not back members’ efforts to stem falling prices by cutting production.

In response, the kingdom on Saturday announced a huge discount in oil prices ($6 to $8 a barrel) to its customers. Saudi Arabia also vowed to increase oil production significantly instead of cutting it to shore up prices.

As of 5:20 a.m. ET, futures on the Dow Jones Industrial Average plunged 1,234 points, or 4.78% to 24,555. The S&P 500 futures tumbled 147 points, or 4.96% to 2,817 while the tech-heavy Nasdaq-100 futures sank 410.13 points, or 4.82% to 8,093.12.

The 10-year U.S. Treasury bond yield dived to a new record low of 0.47%.

Crude futures suffer brutally

The all-out oil price-war between Saudi Arabia and Russia, which erupted over the weekend, also put oil prices on pace for their worst percentage drop since the start of the Gulf War in 1991.

As of 5:20 a.m. ET Monday, U.S. West Texas Intermediate (WTI) crude futures were down $8.51, or around 20.62%, at $32.77 per barrel, after initially sinking 33% to $27.34. International Brent crude oil futures were at $36.30 a barrel, down $8.97, or about 19.81%.

U.S. coronavirus cases rise

The global spread of the novel coronavirus also sent analysts and traders into turmoil early Monday, as they struggled to figure out just how much impact the outbreak will actually have on the global economy.

According to the New York Times, the illness has killed more than 3,800 people and infected more than 109,400 in at least 95 countries. Late Sunday, the U.S. reported it had more than 500 cases of COVID-19, with four more states confirming their first cases.

In Italy, cases topped 7,300 and deaths neared 400 on Sunday, as the country laid out a plan to limit the movement of approximately 16 million people.

Meanwhile, Reuters is reporting that Iran has released around 70,000 prisoners due to the outbreak in the country. Iran is the worst-affected nation after China, with over 7,100 people infected and more than 2,000 deaths as of Sunday.