Why was the oil price shaken today ?
The Oil price today remains shaken because of uncertainty. The two largest exporters of oil are Saudi Arabia and Russia. Both agreed to cut production on Friday in an effort to stop the deterioration of oil prices. Mexico. will play a key role in the implementation of this agreement. Mexico produces about two million barrels per day, to the rest of the producers. The oil price continued to decline after a slight increase due to the agreement.
It is widely believed that the factors that caused the abolition of the oil market are: the continuing Coronavirus pandemic around the world, a significant decline in oil consumption and Concurrent productive competition.
The spread of Coronavirus increased the seriousness of the crisis. Its consequences have not been confined to the largest energy consumer in the world, which is China. It has spread gradually to the rest of the world. Consequently, the price of crude Brent oil fell to below USD 32 on Friday, “which is the least level since 2016”.
According to economic analysts, prices have fallen by at least 66% since the start of this year. The decrease in global oil consumption is about 7 times in April alone. This decline also exceeds the largest quarterly decline in the wake of the 2008 financial crisis.
Experts Opinions about oil price
Oil experts expect that oil prices will drop to less than USD 20 in the future. It 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 will not result in stopping the deterioration of prices. Because of the large decrease in the volume of global oil consumption due to quarantine measures and
due to the stopping of travel and transportation from more than a month.
Oil Producing Countries Meeting
The 9th OPEC and non-OPEC Ministerial Meeting was held on the last Friday. They all agreed to downsize oil production by 10 million barrels per day (bpd). This was a measure to combat recent development brought by the coronavirus.
Outcome of Meeting
The oil-producing countries agreed on adjusting their overall crude oil production down by 10.0 bpd. The downward production will start on May 1, 2020, initially for two months that concludes on June 30, 2020.
Source : KUNA