This is Exchanges of Goldman Sachs, where we discuss developments currently shaping markets, industries, and the global economy.

I'm Jake Stewart, global head of corporate communications here at the firm.

Yesterday on March 9th, stocks had their worst day since 2008 as investors reacted to a price war for crude oil between OPEC and Russia.

Jeff Curry, our global head of Commodities Research, is joining us by phone from our London office to explain what's going on. Jeff and his team have a new report out called The Revenge of the

new oil order. Good morning Jeff and welcome to the program. Good morning Jake.

So Jeff, what's going on in oil markets? Oil's been one of the hardest hit

asset classes from coronavirus, but what led to the start of the price war over the weekend?

Well, it's tempting to think that the coronavirus and the price wars are two new separate downside risk to the oil market.

However, I really like to think that this price war

really is a second round effect of the coronavirus.

In terms of what this did to our price forecast, it took what at the beginning of the year was a $63 a barrel price forecast on Brent.

The coronavirus took it down to $45 a barrel.

The price war has now taken it from $45 down to $30 a barrel at least over the next six

months. Now when we think about what were the immediate causes of this was to begin with Russia

failed to agree with the rest of OPEC for a production cut.

The second round effect of this was that Saudi responded over the weekend by slashing official sales prices by as much as $12 a barrel under Brent prices.

That gives the evidence that this is likely a price war.

So the other question that comes out of this really is the why now?

And we think there's three reasons for this.

The first is that when you look at the balance sheets of the U.S. producers, they had already

been damaged substantially by the decline in prices due to the coronavirus.

That's my point that this is really a second round fact of the

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