On Monday, stocks in Asia experienced problems as the oil prices fell amid fears of a price war. Several days ago, OPEC failed to reach a deal with its allies on production cuts. This news is another challenge for the stock markets.
For instance, the Nikkei 225 in Japan dropped 5.07% to close at 19,698.76. Another Japanese stock index also declined on Monday. Topix index fell 5.61% to end its trading day at 1,388.97.
Moreover, mainland Chinese stocks saw sharp declines on the day. The Shanghai Composite dropped 3.01% to about 2,943.29. The Shenzhen component fell 4.09% to 11,108.55. At the same time, the Shenzhen composite dropped 3.786% to around 1,842.66.
Hang Seng index in Hong Kong slipped 4.23% to close at 25,040.46.
Unfortunately, South Korea’s Kospi index fell 4.19% to close at 1,954.77. Moreover, Australia’s S&P/ASX 200 dropped 7.33% to close at 5,760.60.
Stocks and oil prices
As stated above, the failed agreement had a dramatic impact on the stocks. Shares oil companies declined sharply due to the decision. Shares of Australia’s Santos fell 27.01%, and shares of another Australian company Beach Energy dropped 19.39%.
In Japan, shares of Japan Petroleum Exploration dropped 12.69%. Also, Hong Kong-listed stocks of PetroChina and CNOOC fell 9.63% and 17.23%, respectively.
On Thursday, OPEC recommended reducing oil production. However, on the following day, Russian Federation rejected this offer.
The de-facto leader of OPEC Saudi Arabia announced massive discounts on Saturday to its official selling prices for April. World’s one of the largest oil producers reportedly preparing to increase its production above the 10 million barrel per day.
The meeting in Vienna between OPEC and its allies ended with no directive about the production cuts that are currently in place. It is worth mentioning that the current agreement will expire at the end of the month.
Coronavirus outbreak created many problems. Moreover, fears of price war further complicated the situation.