As lockdowns forced many factories to close & citizens to stop traveling, our global demand meant for oil has gone down by 29 million barrels a per day.
With the minimum price now lesser than the cost of production, transport & storage, just how going to huge oil producers such as Russia & Saudi Arabia fare in the coming year?
It’s very hard to believe that the price of any commodity, let alone oil, may dip into negative territory. However, that’s just what’s occurred to oil prices. Coronavirus has alerted lockdowns, shuttered factories & paused citizens from traveling.
The world economy is shrinking. The new pandemic has also decreased global demand for crude oil by regarding 29 million barrels per day by regarding 100 million a year back.
OPEC & other providers agreed to cut production by 9.7 million barrels per day, far less than the decrease in demand, leaving a massive surplus of crude oil on the market & no buyers. The storage capacity in Wearhouse has filled up quickly.
Several oil-importing nations have already stored huge quantities of oil, taking advantage of lower prices which can not last. U.S. crude oil’s historic crash under zero. U.S. oil prices have already touched below zero first time in history.
Some oil providers, hoping to keep their market share, have already taken to storing their excess oil in sea, leasing tankers at higher prices. Few are believed to soon be paying in more than US$100,000 a day meant for every tanker.