Saudi production rises and barrel price plummets

Last Sunday (8), the price of oil suffered its biggest drop since the Gulf War, and prices continue to plummet. This is because, in the current epidemic scenario of coronavirus that was already affecting the oil sector, Saudi Arabia also decided to announce an increase in its production – a way of measuring forces with Russia that did not accept the agreement of the Organization of Exporting Countries of (OPEC) in the last week.

However, this drop will not only affect the market brazil and its largest state-owned company, Petrobras. In brazil, the price of a barrel of oil will make it difficult to sell petrobras and the billing of possible auctions scheduled for this year, thus decreasing the state's cash flow. In addition, the price of gasoline can change, which will reduce the collection of the Circulation Tax of Goods and Services (ICMS) and also the receipt of royalties by states and Municipalities. In this way, analysts and investors around the world are increasingly concerned about this global landscape.


In the last week, OPEC and its allies have proposed a reduction in global oil production. The measure would be an attempt to contain the fall in oil prices caused by the recent coronavirus outbreak, which has slowing down several economies. However, Russia did not accept the agreement, which made the price of a barrel that was already falling, plummeting even further. As a way of pressure the country, Saudi Arabia, one of the world's largest producers of indicated that it will increase its production – an attempt by the competent authorities to to force Russia to review its plans. With this, the measure can flood the oil market and bring the price of a barrel to close to $20, one of the lowest values recorded since the Gulf War.