Oil prices continue to fall as shutdown hits demand
US to send special energy envoy to Saudi Arabia
Covid-19 continues to batter the price of oil, as widespread lockdowns across Europe and North America reduce demand.
By mid-afternoon trading Brent crude oil futures stand at $25.67 per barrel, after a 4.86 per cent fall, while West Texas Intermediate crude oil futures have fallen 1.90 per cent to $22.20.
Both leading benchmarks have fallen more than 60 per cent on the year-to-date as a result of the novel coronavirus outbreak.
The widespread lockdowns implemented across China in February triggered an oil price war, with Russia rejecting OPEC’s production cut proposals and Saudi Arabia consequently moving to flood the market. This marked the end of the three-year OPEC+ alliance.
With industry and businesses across the Western world closing their doors as governments try to arrest the spread of Covid-19, oil demand continues to plunge and reserves grow ever more oversupplied.
For the first time in almost five decades regulators in Texas are said to be mulling curbing production. With the American shale industry teetering on the edge thanks to the marked drop in prices, the US will send a special energy envoy to Saudi Arabia to stabilise the global oil market.
The price war wears one, however, with analysts predicting a plunge below $20 and some forecasting negative oil prices in certain instances, both countries could have started something they will live to regret.
With both sides striking measured semi-conciliatory tones, this realisation may have already occurred. On Sunday, Andre Belousov, Russia’s first deputy prime minister stated: “Even oil companies who are obviously interested to maintain their markets did not have a stance that the (OPEC+) deal should be dissolved.”
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