Brent crude futures fell by as much as $US14.25,or 31.5 per cent,to $US31.02 a barrel. That was the biggest percentage drop since January 17,1991,at the start of the first Gulf War and the lowest since February 12,2016. It was trading at $US31.27 just after 3.30pm AEDT.
Saudi Arabia,the world's biggest oil exporter,is attempting to punish Russia,the world's second-largest producer,for balking on Friday at production cuts proposed by the Organisation of the Petroleum Exporting Countries (OPEC).
OPEC and other producers supported the cuts to stabilise falling prices caused by the economic fallout from the coronavirus outbreak.
Saudi Arabia plans to boost crude output above 10 million barrels per day (bpd) in April after the current supply deal between OPEC and Russia,- known as OPEC+ - expires at the end of March,two sources told Reuters on Sunday.
Saudi Arabia,Russia,and other major producers last battled for market share like this between 2014 and 2016 to try to squeeze out production from the United States,now the world's biggest oil producer as flows from shale oil fields doubled the country's output during the last decade.
"Saudi Arabia and Russia are entering into an oil price war that is likely to be limited and tactical,"Eurasia Group said in a note.