Oil prices moved higher in early trading following Monday’s more than 20% plunge, which saw US. West Texas Intermediate crude and international benchmark Brent crude post their worst declines since 1991.
WTI gained 92 cents, or 2.9%, to trade at $32.06 per barrel. Earlier in the session prices had been down nearly 3%.
During Monday’s trading session, WTI and international benchmark Brent crude dropped 24.59% and 24.1%, respectively, sinking to more than 4-year lows.
The steep sell-off comes amid escalating tensions between Saudi Arabia and Russia, which traders fear could lead to an excess supply of crude.
On Friday, OPEC ally Russia rejected the additional 1.5 million barrel per day production cut that the 14-member cartel proposed. After the unsuccessful talks concluded, OPEC’s de facto leader Saudi Arabia on Saturday slashed its official oil prices as it reportedly gets set to ramp up production.
The current production cuts expire at the end of March, which means that beginning April 1 nations can pump as much oil as they want.
This potential supply glut comes at a time when prices were already suppressed thanks to the coronavirus outbreak. A slowdown in travel has already hit demand, and a global economic slowdown could depress oil further.
On Monday the U.S. Department of Energy said the Trump administration is monitoring the situation following oil’s steep slide.
“These attempts by state actors to manipulate and shock oil markets reinforce the importance of the role of the United States as a reliable energy supplier to partners and allies around the world. The United States, as the world’s largest producer of oil and gas, can and will withstand this volatility. The growth of the unconventional oil and gas industry in the United States has led to a more secure, resilient and flexible market,” the statement said.