Oil prices tanked more than 8% on Friday to their lowest levels since mid-2017 after Reuters reported that Russia balked steep production cuts proposed by the Organization of the Petroleum Exporting Countries (OPEC) to stabilize prices.
OPEC's plans for deep and prolonged output cuts were derailed as non-OPEC producer Russia refused to support the move, arguing it was too early to predict the impact of a coronavirus outbreak on global energy demand, sources told Reuters.
The number of people infected with the virus worldwide surpassed 100,000 and the economic damage intensified, with business districts beginning to empty and stock markets tumbling.
OPEC and Russia's failure to secure a deal sent the price of benchmark crude into a tailspin.
Brent futures fell $4.32, or 8.6%, to $45.67 a barrel by 11:03 a.m. EST (1603 GMT), lowest price since June 2017. U.S. West Texas Intermediate crude fell $3.82, or 8.3%, to $42.08. At one point, U.S. crude fell as low as $41.85 a barrel, lowest since August 2016.
Brent was on track for its biggest daily percentage loss since 2009 and WTI for its steepest since 2015.
"If this results in OPEC not going through with their own proposed 1 million bpd cuts in Q2, the result ... could be devastating. Brent could swiftly drop 15% to the low $40s and WTI to the high $30s in this scenario," said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
One Middle East source said OPEC had no intention of pursuing deeper cuts without Russia.
OPEC was pushing for an additional 1.5 million barrels per day (bpd) of cuts until the end of 2020.
"The deal is dead," one OPEC source said.
In a statement, OPEC+ said oil producers will continue consultations to stabilize the oil market. The statement, however, made no mention of any production cuts.