Price War During the Coronavirus Outbreak Hurting the Global Oil Market


The article describes the major causes of a drop in oil prices like a price war between Russia and Saudi Arabia, Coronavirus pandemic and their effect on the global oil market.
On 8th March 2020, oil prices witnessed a catastrophic fall that changed the entire ballgame for the global oil market. It all came crashing with the price war that ensued between Russia and Saudi Arabia resulting in the disbanding of the unofficial OPEC+ alliance of 2016.
Oil prices slashed to its lowest in 30 years, crucially contributing to the stock market crash of 2020. As the COVID-19 continued to claim more lives, entire nations were put under a complete lockdown.
Inadvertently, the demand for transportation and factory output fell rapidly, creating a ripple effect in supporting markets; of which the hardest to hit was that of the global oil market. The biggest backlash came from a demand drop in China, which has been the largest importer of crude oil, after the coronavirus outbreak in Wuhan.    A refusal to cut production in Russia has led to a massive surplus while demand continued to drop.
This surplus production has created the question for storage. With more flowing in than going out, onshore tanks are rapidly filling up and will reach its threshold in only a few months.    Many smaller producers that do not have access to major pipelines and ports, may overburden local storage in just a matter of days.
Many refineries are now looking into offshore floating storage capacity, although even that could account for less than a week’s oversupply. The global tank capacity is seizing up and cutting production now may not be enough to keep it from being overhauled.   Major oil-dependent countries like Iraq, Iran, Libya, and Venezuela are feeling the most impact, yet others will not go untouched.
As demand continues to fall while the surplus begins to surmount, some refineries are being forced to shut down.    Multiple oil producers in North America have cut the drilling of new wells. The shale oil boom that brought with it an economic windfall for some states will hurt oil companies.
The U.S. Energy Information Administration forecasts show that U.S.
crude oil production will fall from 13.2 million BPD in May 2020 to 12.8 million BPD in December 2020 and would then fall to 12.7 million BPD in 2021.   In Iraq and Kuwait, oil producers announced price discounts to their buyers, though Iraq's discount was lower than that of Saudi Arabia's.
The United Arab Emirates also announced an increase in production to 4 million barrels per day, higher than the country's estimated output capacity of 3.5 million BPD.   The drop in prices could mean a much-needed relief to major importers of oil such as India, China, and Germany from decreasing energy bills.
Additionally, creating a decline in gas prices may hike up demand for fuel in gas pumps as a direct result of increased supply.  However, it may be too soon to celebrate as decreasing oil prices will not make up for the heavy strife caused to the economy.   According to the International Energy Administration, the global oil demand is plummeting and may drop to 20 million barrels a day.
This is the first time since the recession in 2009 that followed the global financial crisis, there has been a decrease in demand. This has not only put the global oil market at risk but also threatens the global economy at large.
  Source: Free Articles from ArticlesFactory.com .

Top blog stories

AO.co: Online Shopping Made Simple

AO.co is a trusted expert in TVs, washing machines, clothes dryers and other household appliances. AO.com is one of the largest retailers in the UK and it specializes in electronics, clothes and home furniture.

see post

For our people.

At Three, we believe phones are good. They just make life better. Easier. And more fun. But we all need to find a balance that works for us. Our mission is to help our customers use their phones to live their best lives.

see post

We make your life easier

We make your life easier Since 1992, we’ve been helping customers get the best deal on their dream phone. We firmly believe in giving you the highest quality, for the lowest price. That’s why we work with three of the UK’s leading networks to do all the haggling for you,...

see post

FOUR BRANDS BECOME ONE. CURRYS.

Currys PLC is a leading omnichannel retailer of technology products and services, operating through 800+ stores and 16 websites in seven countries.

see post

Halfords - Quicker, Easier, and Convenient.

At Halfords, we're all about the journey. With more than 700 stores with over 10,000 colleagues, we're the UK's leading retailer of automotive and cycling products. We are also the leading operator in MOT, tyres, car servicing and car repairs - pleasing more than 750,000 customers every year.

see post

FOUR BRANDS BECOME ONE. CURRYS.

Currys PLC is a leading omnichannel retailer of technology products and services, operating through 800+ stores and 16 websites in seven countries.

see post

Sky - Epic. Endless. Entertainment.

It's important to us that everyone gets great customer service and can enjoy our products, no matter their level of sight. So, if you're blind, partially sighted or struggle to see or read the screen, we’ve a range of features to help you get the most from our products and...

see post

Nasty Gal - We exist for the “girl in progress”.

Look iconic, without the hassle— using Nasty Gal discount codes, you can shop your favorite pieces for way less by simply entering one of our promotional codes (of your choice) at the checkout. From delivery offers, to promo deals, we keep ‘em coming, so you always have the offer you...

see post

Digital Publishing From Past to Now

The Covid-19 has caused the school and universities to shut down around the world creating a major issue in Learning and Education. As this virus spreads through the interaction and if social distanci... The Covid-19 has caused the school and universities to shut down around the world creating a major...

see post

Why it’s Important to Manage Your Holiday Calendars?

A printable calendar 2021 is a prominent online platform where you download printable calendars of your choice. These calendars can be customized as per our client requirement with photo, text, logo, or any other image. If you are thinking of planning a dream vacation tour with family and kids but...

see post

Cardboard Boxes the Ultimate Need of Every Business

The companies use these boxes for various purposes depending upon their type. The most commonly used varieties of boxes are cardboard boxes, corrugated boxes, and kraft boxes.  Cardstock Boxes The c... The companies use these boxes for various purposes depending upon their type. The most commonly used varieties of boxes...

see post

Tacoma-A premium adventure platform for the family

Austin Haidinyak is an industrial designer in the outdoor and travel industries. Along with his wife, a 3-year old son, and a Shiba Inu named Maggie, he loves to get outdoors and travel as often as possible. Off-road and overland travel by vehicle not only allows Haidinyak to get out...

see post

AO.co: Online Shopping Made Simple


AO.co is a trusted expert in TVs, washing machines, clothes dryers and other household appliances. AO.com is one of the largest retailers in the UK and it specializes in electronics, clothes and home furniture.

For our people.


At Three, we believe phones are good. They just make life better. Easier. And more fun. But we all need to find a balance that works for us. Our mission is to help our customers use their phones to live their best lives.

We make your life easier


We make your life easier Since 1992, we’ve been helping customers get the best deal on their dream phone. We firmly believe in giving you the highest quality, for the lowest price. That’s why we work with three of the UK’s leading networks to do all the haggling for you,...

FOUR BRANDS BECOME ONE. CURRYS.


Currys PLC is a leading omnichannel retailer of technology products and services, operating through 800+ stores and 16 websites in seven countries.

Halfords - Quicker, Easier, and Convenient.


At Halfords, we're all about the journey. With more than 700 stores with over 10,000 colleagues, we're the UK's leading retailer of automotive and cycling products. We are also the leading operator in MOT, tyres, car servicing and car repairs - pleasing more than 750,000 customers every year.

FOUR BRANDS BECOME ONE. CURRYS.


Currys PLC is a leading omnichannel retailer of technology products and services, operating through 800+ stores and 16 websites in seven countries.

Sky - Epic. Endless. Entertainment.


It's important to us that everyone gets great customer service and can enjoy our products, no matter their level of sight. So, if you're blind, partially sighted or struggle to see or read the screen, we’ve a range of features to help you get the most from our products and...

Nasty Gal - We exist for the “girl in progress”.


Look iconic, without the hassle— using Nasty Gal discount codes, you can shop your favorite pieces for way less by simply entering one of our promotional codes (of your choice) at the checkout. From delivery offers, to promo deals, we keep ‘em coming, so you always have the offer you...

Digital Publishing From Past to Now


The Covid-19 has caused the school and universities to shut down around the world creating a major issue in Learning and Education. As this virus spreads through the interaction and if social distanci... The Covid-19 has caused the school and universities to shut down around the world creating a major...

Why it’s Important to Manage Your Holiday Calendars?


A printable calendar 2021 is a prominent online platform where you download printable calendars of your choice. These calendars can be customized as per our client requirement with photo, text, logo, or any other image. If you are thinking of planning a dream vacation tour with family and kids but...

Search topic

Why it’s Important to Manage Your Holiday Calendars?

A printable calendar 2021 is a prominent online platform where you download printable calendars of your choice. These calendars can be customized as per our client requirement with photo, text, logo, or any other image. If you are thinking of planning a dream vacation tour with family and kids but...

Learn more