HOW HAVE THE PRICES
OF CRUDE OIL AFFECTED
DUE TO LOCKDOWN
An Academic presentation by
Dr. Nancy Agens, Head, Technical Operations, Phdassistance
Group www.phdassistance.com
Email: info@phdassistance.com

Introduction
Global Fall of Oil Prices
Impact on Europe and Africa
Impact on India
Impact on US and China
What would be the Economic Consequences for Oil Producing Countries
Oil Producers most Impacted by COVID-19; where they are now
Conclusion
Outline
TODAY'S DISCUSSION

COVID-19 threatens the survival of the modern-day human Homo sapiens.
The tiny virus has expanded its active presence across continents, with an impactful
footprint in over 175 nations.
Petroleum sector, more precisely crude oil, is one of the linchpins of global economy.
In December 2019, the appearance of the corona virus in China and the gradual
expansion of the epidemic drastically reduced crude oil demand and price.
Introduction

On 31 December 2019 , on the reporting day of Covid19, WTI oil price dropped to
US$23.36 on 23 March 2020.
More than a 61 % decline in WTI crude’s price sends out a warning of market disparity.
EIA forecast crude oil prices for Brent and WTI to average $43 / b and $28 / b by 2020.
Leading investment banks Morgan Stanley, Goldman Sach, and Barclays respectively
updated the crude price to $30 / b, $20 / b, and $31 / b.
Global Fall of Oil Prices

Lockdown is in effect in Italy, Germany, India, Great Britain, South Africa, and Spain.
Corona lockdowns have appealed people to "stay home" and avoid
Corona effectively limits all modes of movement and thus the transport sector 's oil
use is expected to drop dramatically.
Additionally, shorter manufacturing and consumer operations should limit fuel usage.
unnecessary travel.
Impact on Europe and Africa

In India, all forms of rail, road, and air public transport have been suspended
until 14 April 2020.
Demand for fossil fuels is on free fall except for LPG and domestic natural gas.
The refiners are forced to slash their output to an immediate degree of 25-30
percent because of production.
Impact on India

America — the world's biggest nation and the main user of oil, finds itself at the
peak of the list with most patients diagnosed with COVID-19.
China, the 2nd-largest consumer of oil, seems to be on the path to recovery.
Restricted business practices would certainly add to an economic downturn in
these countries accompanied by an severe global slump.
Impact on US and China

The world's leading oil-producing countries prove to be the worst
affected because of the Coronavirus lockdown, having been forced to
deal with the pandemic’s double impact and crashing oil prices.
What would be the Economic
Consequences for Oil Producing Countries?

Russia has over 200 k COVID-19 infections, but its mortality incidence of 2000 odd is
the lowest among countries.
Russia has agreed to the recommendation of OPEC with its oil companies to cut
production by 20 % each.
THE UNITED STATES:
The US, which is the world's largest oil producer with 13.1 million barrels of crude and
lease condensate every day, saw a 9k barrel decline in April in its regular output.
RUSSIA:
Oil Producers most Impacted by COVID-19;
where they are now
contd..

With 42,000 + infections and 250+ casualties, last month Saudi Arabia partly lifted the
curfew in all regions except Mecca, where they held 24-hour curfew.
Saudi Arabia is also one of the producers who are feeling the greatest heat of the oil
crisis, owing to its high reliance on $76.1/barrel of oil and fiscal breakeven.
Iraq is also the 2nd-largest OPEC oil producing country and home to some of world’s
largest oil reserves.
Iraq needs $60.4 per barrel of oil to balance its accounts.
SAUDI ARABIA:
IRAQ:
contd..

This is by far the largest for an OPEC member, and the 10th largest in
the nation, with 110,767 infections.
Iran was a significant global oil exporter in March delivering 2.02 million
barrels per day.
The IMF says Iran needs a whopping $389 barrel for its accounts to
reconcile.
IRAN:

In the short term, the oil companies may bypass the Financial mayhem using their
cash reserves.
Oil consuming nations should enjoy low oil rates while exporting nations must find a
way through alternative methods to raise revenues.
COVID-19 will seriously push the oil industry to the ICU, where the industry will be
badly hurt by a lack of ventilators.
During COVID-19 and beyond, policymakers must take care of the oil industry
because survival of this industry holds the key to economic revival.
Conclusion

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