Oil Gas GineersNow May2020 COVID-19, coronavirus, oil price, fuel chemical drilling exploration offshore onshore petroleum petrochemical refinery upstream downstream energy oilrig

NEWS
Oil Price War Amidst COVID-19
Pandemic
from the stock market. For now,
however, the strong dollar due to
exceptionally strong demand and
a broken bond market especially
on the corporate side, highlights
the challenging road that lies
ahead.
Turning to commodities, the
table below shows the damage
inflicted on the sector so far this
year. Crude oil, which is the glue
that keeps the global economy
going while also providing the
main income for many countries
and regions, has led the collapse.
An extraordinary slump in global
demand has opened up a 5 to 10
million barrels/day gap between
demand and supply.
Writing about global market
developments at this moment
in our shared history has been
particularly challenging over the
past couple of weeks. Denmark,
like many other countries, is
currently in a partial lock down
while we watch the number
of casualties from Covid-19
continue to grow, not least in
Europe, the current epicenter, but
probably soon in the US as well.
Working from home, trying to
stay out of harms way, has been
the right decision to adopt by
governments. The flipside is
the terrible cost in terms of lost
revenues and pressure on smaller
companies to stay afloat and to
keep their staff on the payroll.
Over the coming weeks and
months we are going to see a
dramatic jump in unemployment
thereby signaling a temporary
end to the good times that many
have experienced during the past
decade.
Governments and central banks
have already stepped up and
dozens of major bazookas have
been fired in order to support
individuals and companies.
Perhaps we reached peak panic
this past week, only time will
tell. At least we’re seeing some
stabilization emerging, not least
The price war started by Saudi
Arabia two weeks ago combined
with a continued drop in demand
as countries grind to a halt
and planes are grounded could
see this gap potentially rise by
another 5 million barrels/day
from April and onwards.
The result of these developments
has been an unprecedented
oil price collapse which on
Wednesday saw Brent crude oil
touch $25/b for the first time
since 2003. Compared with the
average price of $65/b in 2019,
the net reduction in payments
from consumers to producers
is currently close to $3.5 billion
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