Global markets in turmoil after oil prices crash

The global stock markets have seen a bullish trend on Monday, following a sharp fall in oil prices in Asia and weak economic trends.

Oil prices nosedived on worries a global economy weakened by a virus outbreak might be awash in too much crude.

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Tokyo’s benchmark Nikkei 225 tumbled 6.2%, while Sydney’s S&P/ASX 200 witnessed a decline of about six percent. Seoul’s KRX sank 4.4% while The Stock Exchange of Hong Kong Limited (HKEX) lost 3.9%. Shares also sank in Middle East trading on Sunday.

The decline is being viewed by fears of a war on oil prices between Organization of the Petroleum Exporting Countries (OPEC) and its biggest ally, Russia. Saudi Arabia, Russia and other oil producers are arguing over how much to cut output to prop up prices.

On Monday, the Asian market saw a drop of more than 20%, which analysts call a global price war. Saudi Arabia, the world’s largest oil exporter, announced a drop in its oil prices at the end of the week when it failed to convince Russia, on Friday, to decrease the speed of its oil production.

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OPEC and Russia had previously worked together to curb oil production. Oil prices are down more than 20% with Brent crude trading at $35.98 a barrel. Oil firms Shell and BP both fell 15%.

They met to deal with the drop in demand for oil due to the outbreak of the coronavirus (COVID-19). The number of infections from the virus that causes COVID-19 has topped 110,000 worldwide.

Overall, the price of oil was earlier at that level in January 2016 and is near the lowest oil price in the last 16 years.

Global companies have been hit by sweeping anti-disease measures. Apple says slowdown in manufacturing iPhones in China will hurt its sales total. An airline industry group says carriers could lose as much as $113 billion in potential ticket sales.

Central banks worldwide have cut interest rates. Investors are looking ahead to a meeting Thursday of the European Central Bank, which is widely expected to announce new stimulus measures.

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