The global economic slowdown has caused oil prices to fall to the lowest since 2002, with Brent crude sliding more than seven percent on Monday to just $22 a barrel. The industry is facing its largest demand drop in history.
US crude benchmark West Texas Intermediate (WTI) hit a low of $19 per barrel overnight, before picking up slightly to over $20 per barrel as of 11:50 GMT.
Oil prices have tanked by more than half in the past month, with companies cutting back and closing production as a result of the COVID-19 pandemic, combined with the OPEC+ disagreement over production cuts. Traders expect global surplus to approach 25 million barrels a day next month, which could overwhelm storage capacity worldwide within weeks.
“The pain in the shale patch is going to be severe. We will see production shut-ins accelerate,” Bordoff warned.
On Saturday, the head of the Russian Direct Investment Fund (RDIF) Kirill Dmitriev said that a new agreement to stabilize oil markets is possible if more nations support the initiative. He told Reuters that the coronavirus pandemic has become a “perfect storm” to trigger a new global financial crisis that will result in a recession. To offset the economic fallout of the outbreak, countries should come together, including in imposing new output curbs to end the oil market turbulence.
Source: rt.com
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