The Saudi stock market, which also traded on Sunday, tumbled 7 per cent in intraday trading, and even Saudi Aramco fell below its offering price. In addition to equities, sharp swings in commodity markets, especially oil prices, are also worrying and, more worryingly, fears of a renewed oil price war are escalating.

Oil price war starts again?

As the Organization of Petroleum Exporting countries (OPEC) and Russia-led non-OPEC oil producers failed to agree on crude oil production policies after the end of March this year, international oil prices fell in panic. By the close of trading on the 6th, light crude oil for April delivery on the New York Mercantile Exchange fell 4.62 US dollars, or 10.07%, to close at 41.28 US dollars a barrel. London Brent crude for May delivery fell $4.72, or 9.44%, to $45.27 a barrel.

Russian Energy Minister Novak said that as OPEC and non-OPEC producers failed to agree on what to do next, they would no longer be bound by production caps or cuts from April 1.

In addition, the news from Saudi Arabia shocked the market even more. Saudi Arabia sharply reduced the price of crude oil sold to markets such as Europe, the far East and the United States on the 7th, with the highest discount in nearly 20 years, overseas media reported. At the same time, Saudi Arabia also privately told market participants that it would increase production if necessary, even reaching a record level of 12 million barrels per day.

OPEC said the COVID-19 epidemic had a significant negative impact on the global economy and crude oil demand in 2020, especially in the first half of the year. According to OPEC's latest forecast, global crude oil demand growth in 2020 is expected to be 480000 barrels per day, lower than the average daily growth forecast of 1.1 million barrels per day in December 2019, and is at risk of downward adjustment. Goldman Sachs Group said that even if OPEC and non-OPEC oil producers make additional production cuts, it will not be enough to stop a supply glut in the global oil market in the second quarter, and that a rebound in demand rather than production cuts is the necessary catalyst for a sustained rebound in oil prices.

Some investors believe that the decline in demand caused by the COVID-19 epidemic may be made worse by the increase in Saudi production. "Saudi Arabia is waging a full-scale price war," said Naseri, Middle East managing director of FGE, an energy consulting firm. "

Saudi Aramco, a Saudi state-owned oil company, announced its first marketing decision after the OPEC conference, according to a document exposed by overseas media. The declaration file shows:

The price of crude oil sold to Asia in April was cut by 4-6 US dollars per barrel.

The price of crude oil sold to the United States in April was cut by $7 per barrel.

Saudi Arabia's decision also reminds the market of the oil price war a few years ago. In November 2014, Saudi Arabia ramped up production regardless of its role as an oil market balancer, trying to resist US shale oil with low oil prices. The price of Brent crude has since plummeted, falling to $25 in late 2015 and early 2016. However, shale oil "survived", and OPEC later had to persuade Russia to cut production. Today, the oil world is still paying for Saudi Arabia's decision that year.

Some analysts say Saudi Arabia seems to be fighting an oil price war again six years later. It's just that this time it's Russia. The Saudi shock and awe strategy is designed to inflict maximum pain on Russia, the US and other oil producers as quickly as possible, with a view to forcing them back to the negotiating table, then quickly reverse the strategy and start cutting production as soon as an agreement is reached.

Saudi Aramco breaks, when will the bear market in oil prices end?

Iranian Oil Minister Zanganeh has said that Saudi Arabia will have more influence on oil prices than any other country. Today, this phrase seems to be "honoured" in financial markets.

Under the influence of a variety of factors, the Middle East stock market fell first as a tribute this week. On the 8th, the Middle East stock market, which was trading, fell almost entirely, among which the Israeli stock market benchmark index fell more than 4.5% during the day, the biggest drop in nearly 14 months. The benchmark Saudi stock index fell more than 7 per cent in intraday trading, the Abu Dhabi ADX index fell 5.78 per cent, and the Cairo EGX30 index and the Doha stock index both fell more than 3 per cent.

It is worth noting that Saudi Aramco shares fell more than 6% at one point in intraday trading and fell below their offering price.

Saudi Aramco, known as the "most profitable company" in the world, has attracted a lot of attention on its listing plans and performance after its listing. Saudi Aramco was listed on the local exchange in December 2019 at a price of 32 rials. After listing, Saudi Aramco officially overtook Apple Inc to become the company with the highest market capitalization in the world, and once exceeded 2 trillion US dollars.

It is reported that the company, which claims to be the most profitable company in the world, is using high dividends to tempt potential investors. Bank of America Merrill Lynch, a member of the stock underwriting consortium, has said Saudi Aramco stressed that shareholders could receive not only the minimum dividend promised by the company, but also additional dividends in excess of the dividend. Previously, Saudi Aramco promised shareholders an annual dividend of no less than $75 billion over the next five years.

BofA Merrill Lynch said that if crude oil prices averaged $70 a barrel over the next four years, an additional $18 billion in free cash flow would bring additional annual dividend payments to $30 billion. This means that Saudi Aramco is hinting to international investors that the company's total dividends to investors could exceed $100 billion a year.

It is also reported that Saudi Aramco is in talks with a number of Wall Street banking institutions on a secondary listing and is inclined to list on one of the many exchanges in Asia.

However, it seems that Saudi Aramco's huge dividends and secondary listings will also take a hit under the influence of volatile markets.

In fact, in addition to oil prices, when Iran "fell" in the face of the epidemic, the whole Middle East has also opened the "door of panic". Iraq, Bahrain, Kuwait, United Arab Emirates, Israel, Oman. Confirmed cases are occurring in more and more neighboring countries. At the same time as the epidemic spread, the situation in the Middle East made waves again, with Turkey and Syria engaged in hand-to-hand combat. The Middle East stock market is doomed by the global stock market shock, while under the influence of the long-term supply and demand background and epidemic situation, the stimulation of production reduction and even regional hot spots has become very limited.

Zhong Meiyan, research director of the Energy and Chemical Industry Department of Everbright Futures Research Institute, said that at present, oil prices are still difficult to bottom in terms of time and extent, which depends on the depth of the new round of industry changes. With the advent of the crisis and the weakness of both supply and demand, there is a long way to go for oil prices to bottom, and the weakness of demand and oil prices may continue until June.