Coronavirus undermines oil market fundamentals, oil prices remains shaken
This news has been read 5815 times!
VIENNA, April 11 (KUNA) — OPEC member states, especially Saudi Arabia and Russia, which are the largest exporter from outside the organization, agreed to cut production on Friday in an effort to stop the deterioration of oil prices.
Despite this agreement, whose implementation has been linked to the accession of Mexico, which produces about two million barrels per day, to the rest of the producers, the price of oil continued to decline after a slight relative increase due to the agreement.
It is widely believed that the continuing Coronavirus pandemic around the world, and a significant decline in oil consumption and concurrent productive competition have caused the abolition of all main factors that the oil market has been following for a long time.
The spread of Coronavirus increased the severity of the crisis, considering that the consequences will not be confined to the largest energy consumer in the world, which is China, but has spread gradually to the rest of the world.
As a result, the price of crude Brent benchmark fell to less than USD 32 on Friday, “which is almost the lowest level since 2016”.
According to economic analysts, prices have fallen by at least two-thirds since the beginning of this year, which brought to mind what happened during the war of liberation of Kuwait in 1991.
The decline in global oil consumption is estimated seven times in April alone, which also exceeds the largest quarterly decline in the wake of the 2008 financial crisis.
Oil experts in energy affairs expect in statements reported by local media that oil prices will continue to drop to less than USD 20 in the future, and that would do great harm to the economies of all producers, whether OPEC members or from countries outside the organization.
Experts believe that the recent agreement between the producers to reduce production did not result in stopping the deterioration of prices, due to the large decrease in the volume of global oil consumption, and in light of quarantine measures, and the stopping of travel and transportation in effect for more than a month, which is expected to continue for another indefinite period.
Last Friday, the 9th (Extraordinary) OPEC and non-OPEC Ministerial Meeting agreed to downsize oil production by 10 million barrel per day (bpd) as a measure to combat recent development brought by the coronavirus (COVID-19).
The meeting’s final statement said the OPEC and non-OPEC oil producing countries agreed on adjusting downwards their overall crude oil production by 10.0 bpd, starting on May 1, 2020, for an initial period of two months that concludes on June 30, 2020.
This news has been read 5815 times!
