Oil prices fell to the lowest in more than 17 years as demand plunged as a result of the pandemic and an unrelenting price war between Saudi Arabia and Russia showed no signs of easing.
Brent crude prices hit $23.03 a barrel on Monday morning during Asia hours – the lowest level since Nov. 15, 2002. It has since clawed back some losses following that record decline, but was last still 5.86% lower at $23.47 a barrel.
U.S. West Texas Intermediate (WTI) crude futures briefly dipped below $20 per barrel to $19.90 – their lowest level since March 20, when they fell as low as $19.50. WTI was last 4.51% lower at $20.54 per barrel.
Those declines come as Saudi Arabia signaled no breakthrough in the oil price war with Russia. On Friday, the two countries were still at a stalemate, with Saudi Arabia saying it was not in talks with Russia to stabilize oil markets despite Washington stepping in to pressure both sides to end the price war.
"Russia and Saudi Arabia show no signs of compromising in their standoff over oil supply," National Australia Bank's Rodrigo Catril wrote in a Monday note.
In early March, OPEC and non-OPEC allies, sometimes referred to as OPEC+, failed to agree on the terms of deeper supply cuts.
The fallout between OPEC kingpin Saudi Arabia and non-OPEC leader Russia has kickstarted an oil price war. OPEC recommended additional production cuts of 1.5 million bpd starting in April and extending until the end of the year, but OPEC-ally Russia rejected the additional cuts.
Such a move could prompt a wave of bankruptcies and investment cuts in the U.S. which, in turn, would have a noticeable impact on shale production.
"We think oil supply from the US, Canada and China are the most likely to be curtailed at low oil prices. US oil production cuts are expected to be the most significant," Vivek Dhar of the Commonwealth Bank of Australia said in a note on Monday. "The plunge in US oil rigs last week signals the pressure facing the US shale oil sector."
Countries have gone into lockdown due to the coronavirus pandemic, with flights all over the world canceled as airlines ground their planes, hitting economic activity and fuel demand. That has led to excess supply flooding the market as well.
With 3 billion people in lockdown, global oil requirements could drop by 20%, International Energy Agency head Fatih Birol said, according to a Reuters report on Friday.
"The world is facing a hugely deflationary shock. The WTI oil price has dropped from USD60 in January to around USD20. Demand for many goods has plummeted, as economic activity has gone into stasis," ANZ Research's Kishti Sen said in a Monday note.
"The deepening pandemic and reduced appetite for crude oil by refiners sent the oil price into a tailspin," he added, saying the quarterly and monthly price declines have been "the steepest in history."
"Amid the worldwide lockdowns, storage capacity is filling fast and may soon run out unless there is an urgent supply cut."
— CNBC's Sam Meredith and Reuters contributed to this report.