How have the Prices of Crude Oil Affected Due to Lockdown? - Phdassistance.com
                     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: [email protected]
TODAY'S DISCUSSION
Outlin Introduction
e 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
Introductio
n
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.
Global Fall of Oil 
Prices
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.
Impact on Europe and 
Africa
Lockdown is in effect in Italy, Germany, India, Great Britain, South Africa, and Spain.
Corona lockdowns have appealed people to "stay home" and avoid 
 unnecessary travel.
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.
Impact on 
India
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 US and 
China
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.
What would be the Economic  
Consequences for Oil Producing 
Countries?
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.
Oil Producers most Impacted by 
COVID-19;  where they are now
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:
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.
contd..
SAUDI ARABIA:
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:
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.
contd..
IRAN:
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.
Conclusio
n
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.
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