It is impossible to say what will happen to oil prices as a result of the COVID-19 pandemic and global recession. But there are signs that, though demand will take time to recover, supply may be adjusted faster than during past crises.
MEXICO CITY – With oil prices at historic lows, many are desperate for some idea of what will happen next in energy markets. As a wise oil expert once advised me, we should never try to predict the future price. But we can shine a light on how the COVID-19 pandemic is affecting oil markets today, and what their prospects are.
Until a few weeks ago, the world was producing and consuming around 100 million barrels per day (b/d). But social-distancing rules and movement restrictions aimed at curbing COVID-19 infections have caused global oil demand to plummet. The US Energy Information Administration (EIA) forecasts that global liquid fuels consumption will average 92.6 million b/d in 2020, down 8.1 million b/d from 2019. In June, OPEC crude oil production could fall below 24.1 million b/d.
At the same time, countries’ oil inventories are at or near full capacity. Typically, OECD countries hold about a 60-day supply of crude oil. Today, they are holding an 85-day supply. The EIA expects that global oil inventories will grow this year at an average rate of 2.6 million b/d – the largest annual buildup in the 40 years the EIA has tracked international data. Simply put, the world is running out of space to store oil.
The US will no longer stand in the way of an international waiver that would allow the production of generic COVID-19 vaccines, but the fight isn't over. And the longer the pharmaceutical industry resists sharing knowledge and technology, the greater the risk posed by the emergence of new vaccine-resistant variants.
dismantle Big Pharma's arguments against waiving intellectual property rights to boost global vaccine production.
MEXICO CITY – With oil prices at historic lows, many are desperate for some idea of what will happen next in energy markets. As a wise oil expert once advised me, we should never try to predict the future price. But we can shine a light on how the COVID-19 pandemic is affecting oil markets today, and what their prospects are.
Until a few weeks ago, the world was producing and consuming around 100 million barrels per day (b/d). But social-distancing rules and movement restrictions aimed at curbing COVID-19 infections have caused global oil demand to plummet. The US Energy Information Administration (EIA) forecasts that global liquid fuels consumption will average 92.6 million b/d in 2020, down 8.1 million b/d from 2019. In June, OPEC crude oil production could fall below 24.1 million b/d.
At the same time, countries’ oil inventories are at or near full capacity. Typically, OECD countries hold about a 60-day supply of crude oil. Today, they are holding an 85-day supply. The EIA expects that global oil inventories will grow this year at an average rate of 2.6 million b/d – the largest annual buildup in the 40 years the EIA has tracked international data. Simply put, the world is running out of space to store oil.
We hope you're enjoying Project Syndicate.
To continue reading, subscribe now.
Subscribe
orRegister for FREE to access two premium articles per month.
Register
Already have an account? Log in