With border restrictions and traffic bans amid the coronavirus outbreak, all is not well in the world energy markets. A sharp drop in global prices for one of world’s most important commodities- oil and natural gas products has affected investments in production and exploration. As per some analysts the change in supply and demand will further worsen the prices in the days to come.
With prices plunging and reflecting on oil producers’ balance sheets, the U.S. benchmark for oil are nearing the lowest since 2002, to say- below $20 a barrel on Monday, as global demand for oil decreases. Prices down 54% for March and 66% for the quarter, there comes the largest monthly and quarterly drops ever, according to data compiled by Dow Jones Market Data Analysis.
A double setback with supply blow of Saudi Arabia’s declaration of a price war with Russia and nationwide shutdown due to coronavirus pandemic, the demand for crude is now expected to fall by as much as 14 million barrels a day in the depths of a financial crisis. While some small companies are struggling with heavy debts, as they got lured into prolonged interest rates, many large producers have announced cuts in capital spending.