As the World Health Organisation has announced that Covid-19 is a pandemic, it was natural for the crude oil businesses to have a slower operation. This impacts the production later down the line, and therefore impacting the oil and gas prices.
How has the Coronavirus impacted fuel usage?
As the new Coronavirus spreads across the globe, larger economies are preparing to hand out trillions of dollars to reduce the impact. Nations are imposing strict rules and high levels of social restrictions that have not been used since the Second World War back in 1939.
Although the amount of new confirmed cases of Covid-19 in China have begun to fall, it is still too early to know if the virus is being successfully contained. The longer everyone is staying inside, the less need there is for crude oil. This has led to forecasters cutting the estimates for the 2020 oil demand. This will likely have a significant effect on the oil and gas prices.
Lots of countries across the world have also begun to limit, or ban travel to certain areas. This is likely to last a fair while, lowering the demand of kerosene for the foreseeable future.
What effect did the coronavirus have on fuel prices?
As the Coronavirus outbreak began in China, it caused a huge slowing in the economy in the largest energy consuming country. The fall in demand for fuel and oil led to a decrease in its price – the OPC discussed this change on the 6th of March.
The OPEC countries have decided to lower the rate of fuel production due to coronavirus by cutting down on 1.5 million barrels being made each day. However, Russian representatives did not agree with this, and fought to increase the rate of production. As a result, many fuel companies lost millions in their commodities value.
Oil reserves are estimated to be worth a staggering 50% of what they were worth at just the beginning of the year, that’s without coronavirus reaching its peak in the world. Large industry giants are even taking the blow, with BP’s market being worth just 51% of what it did when the year began!
What impact has Coronavirus had in the Middle East?
Supporting the current prices, the oil output from Libya has ended up falling through since January the 18th due to the closing off of the ports and oilfields.
Down in Saudi Arabia, the stockpiles of crude oil dropped by 11.8 million barrels back in December 2019 regardless of the continuing shipments by the largest oil exporter.