The share price of Oil Search Limited (ASX: OSH) was the worst performer in the ASX 200 (INDEXASX: XJO). It fell by 35%.
At the start of trading we learned that the oil-producing countries of OPEC plus Russia couldn’t agree on a reduction of oil production. This led to a fall in the oil price by around 30% with Saudi Arabia cutting oil prices. Production is now a lot higher than demand, in a classic example of what happens to price when supply gets out of whack compared to demand.
Oil Search was the worst-performing oil business within the ASX 200, but there were several oil shares that fell by around 20% or more including: Santos Ltd (ASX: STO), Beach Energy Limited (ASX: BPT) and Worley Ltd (ASX: WOR).
Some commentators think that Saudi Arabia is trying to make the oil price so low that US shale oil producers would have to turn off production for a while.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.