Chaos within OPEC is once again rocking oil prices — and rattling the stock market in the process.
The Dow dropped as much as 267 points before rebounding a bit on Wednesday. The trigger? Oil prices plunged 4% and got close to $30 a barrel — and then raced back to $32.
The latest turbulence comes after Saudi Arabia ruled out the idea of cutting production due to deep distrust among oil producing nations. Iran dashed hopes global producers would come to an agreement on freezing output at their already-high levels. The country’s oil minister blasted the Saudi-led idea of production freeze as a “joke” on Tuesday.
IMF head Christine Lagarde told CNNMoney she’s worried sluggish global demand means oil prices are “going to be low — and for longer.”
“Those countries that were massive consumers of oil are reducing their consumption,” Lagarde said. “China, for one, has not reduced so far but will probably reduce in due course.”
All of this is bad news for the stock market, which is obsessed with the downsides of cheap oil. So far in 2016, oil and the S&P 500 have moved together 87% of the time, a CNNMoney analysis found.
Just look at last week. The Dow soared 418 points — its best performance of 2016 — after oil prices climbed back above $33.50 a barrel.
–CNNMoney’s Heather Long contributed to this report