Why has the price of a barrel of oil dropped so much?

Oil was already falling. Before coronavirius reduced global demand, the dark paste was about $ 70 a barrel. Last week, it was $ 50 and a half.

Then Saudi Arabia proposed to OPEC, the club of oil-producing countries, to put a brake on production - curbed production, the price increases. It was a plausible strategy. It would help countries that live off oil sales to get through the corona crisis without major turmoil.

But it didn't happen to agree with the Russians. Putin did not want to enter the game. He preferred to continue producing whatever he wanted on the tile.

In view of the strength it took from Russia, Saudi Arabia retaliated: it drastically increased its production, reducing prices, to take the market away from the Russians.

Then Russia agreed to talk, right? No! She retaliated: she pushed that button that appears in the self-help book titles and increased production as well.

This puts the price of oil on the table. From Saturday to Sunday, it fell 30%. The biggest fall since 1991, when the United States declared war on Iraq for the first time.

It is not even Saudi Arabia that gets complicated there. These are the other oil-producing countries - the case of this one where you live. The pre-salt extraction cost price is much higher than that of Saudi Arabia. Aramco, which is their Petrobras, spends only US $ 2.8 to remove each barrel under the desert sand. Petrobras from here needs three times more, about US $ 8, to get oil 7 km below the sea surface

In Russia, it is said, the cost of extraction is much higher, almost $ 20. But that is what: the Russians may even offer an ox from time to time to avoid getting into a fight. But they give a cattle to not leave. In this case, a barrel.

Meanwhile, whoever has Petrobras shares is left to cry, and the rest of the population, to pressure the state company to deliver a reduction in the price of fuels - mainly diesel, whose cost is fundamental in the formation of prices for basically everything. In the end, it can be a beautiful stimulus for our own economy not to crash.