Asian shares plummeted as oil prices continued its downward spiral in early trading on Wednesday after Saudi Arabia effectively quashed hopes of production cuts by major oil producers in the near future.
Saudi Oil Minister Ali Al-Naimi said on Tuesday that he was confident more nations would join the freeze agreement but cautioned markets not to expect the pact to freeze oil output at January levels to lead to any production cuts.
Iran endorsed the deal last week, but did not commit to any output freeze. It previously announced plans to raise oil exports back to pre-sanction levels of 4 million barrels per day.
MSCI’s broadest index of Asia-Pacific shares outside Japan shed 1.1% as of 0246 GMT, extending previous losses. Wednesday’s drop sent the index further away from Monday session’s 6-week high.
Japan’s Nikkei (.N225) slipped 0.7% as the stronger yen weighed on exporters after investors went scurrying for the safe-haven currency.
In China, shares opened higher but gave up gains, with the CSI 300 index losing 0.1%. Meanwhile, the Shanghai Composite (.SSEC) was virtually unchanged.
Oil prices in Asia skidded in early sessions, extending earlier declines of more than 5% overnight. Futures for U.S. crude (CLc1) fell 1.8% at $31.29 per barrel, while futures for international oil benchmark Brent gave up 1% at $32.94.