Oil prices have dropped below $23 a barrel for the first time in nearly two decades. This came after Saudi Arabia promised to keep production at a record high "over the coming months," intensifying its price war with Russia

Fears of an economic recession drove U.S. oil prices down to $20.37 a barrel, the lowest level since February 2002, according to CNN. Brent crude, the international benchmark, fell by 14 percent to $24.88 per barrel, its lowest point since May 2003.

The novel coronavirus weakened the demand for energy worldwide. China, for example, used to be the top importer of crude oil, but with idle factories and cancelation of flights, its demand has gone way down. Globally, travel restrictions and country-wide lockdowns have also driven the demand for oil down. 

From a global lens, the demand in the first three months of 2020 is expected to drop 435,000 barrels per day compared to the same period last year, according to an International Energy Agency (IEA) report

The fact that Saudi Arabia and Russia haven't been holding their end of the bargain as "price stabilizers" is not helping. 

Earlier this month, members of the Organization of the Petroleum Exporting Countries (OPEC), a group of 15 oil-producing countries with Saudi Arabia as the leader, met in Vienna, Austria, to discuss the impact of COVID-19 on global demand.

The world's top oil exporter, Saudi Arabia, then launched a price war after the erosion of an alliance between OPEC and Russia, which was formed in 2016 after oil prices dropped to $30 a barrel at the time. The agreement, referred to as OPEC+ alliance, was that the world's two oil-producing exporters (Saudi Arabia and Russia) would cut supply by 2.1 million barrels per day to combat declining prices. Saudi Arabia wanted to increase that number to 3.6 million barrels in 2020 but Russian President Vladimir Putin did not agree to that. And so the long-standing agreement fell through and a price war was ignited.

Russia refused to cut production; Saudi Arabia slashed prices and upped production — and the market fell off the rails. 

Oil is now cheaper than any time during the 2008 global financial crisis when crude oil prices declined to $32 per barrel. 

The current demand for oil is in free fall, and the outlook isn't looking too good. According to CNN, American multinational investment bank and financial services company Goldman Sachs expects 2020 oil demand to shrink by 1.1 million barrels per day; Rystad Energy, an independent energy research firm, believes demand will plunge 2.8 million barrels per day this year. 

Some analysts even believe that the worst is yet to come. According to Oil Price, April could see the "largest supply overhang in the history of the oil market."

It is also expected that the oil-price war between Russia and Saudi Arabia is going to lead to the biggest flood of crude in history. And only time will tell how it will all unfold.