The spread of the coronavirus globally from January 2020 negatively affected the global oil market. So, at the end of February this year, the price of Brent crude oil showed the lowest level in the past 12 months, barely surpassing the mark of$ 50 per barrel, which almost negated the positive price change in the upward direction.
Despite the fact that at the beginning of March was recorded a slight increase in oil prices on the eve of negotiations of OPEC+ 5-6 March in Vienna, the situation on the world market continued to remain highly unstable. Overall, for the first two months 2020 predictions about the impact of coronavirus on oil markets went from a simple belief of the world community that the consequences of the spread of the virus will only affect the energy sector of China, to confidence that the global market will not be able to cope with pressure at least until the end of the year.
It is possible to allocate two ways of influence of the spread of the coronavirus in the oil markets.
- Restrictions on travel to foreign countries, resulting in a review of certain States workers home, results in less fuel consumption by the aircraft, deceleration and violation of supply chains. As a consequence, is used and produces less oil. Demand is falling, causing the situation as "turbulence" in global markets.
- The current volatility in the oil market amid the spread of the coronavirus directly affects long-term forecasting the level of demand for oil and petroleum products, which raises concerns of investors and observers.
A main scenario in the short term. In the overall assessment it can be described as negative. Such a scenario is associated, primarily, with the position of Russia at negotiations the members of OPEC+, held on 5-6 March to eliminate the fall in demand for oil. On March 5, members of OPEC+, agreement was reached on a further reduction in the level of oil production by 1.5 million barrels per day before the end of the year. This, according to experts, could have a positive impact on the situation with oil prices in the near future. However, on March 6 it became known that Russia was the only member of the group to abandon this initiative and to agree only to extend existing agreements for a quarter. This very unexpected turn of events not only promotes a further drop in oil prices (may futures on Brent crude has now fallen by 30% and dropped to 31.27 $ per barrel), but also jeopardized the cooperation of the members of OPEC+ Russia.
This extremely negative situation is exacerbated with the spread of the coronavirus in the U.S. and Europe. In this case continue to bear the damage not only on the oil markets, but also throughout the system of trade and financial centres, in particular due to measures to contain coronavirus and attempts to stabilize oil prices.
In General, experts tend to negative forecasts both short-and long-term prospects. According to the International energy Agency, by the end of March, global oil demand will fall by 435 thousand barrels per day (the lowest forecast in 10 years). Goldman Sachs predicts the growth of world demand for oil in 2020, not 1.2 million barrels per day (as previously stated), and half of 600 thousand barrels per day. Aggravates the situation and the negative impact of coronavirus on the economy of the countries of the Persian Gulf - the largest oil producing countries, economic growth which is projected to be only 1.7 % compared to 2.5 percent reported last year.
Observers agree in opinion that no restrictions and measures not yet able to contain the fall in oil prices. It is obvious that while the risk of transmission of coronavirus is high and Russia's position is unchanged, the global oil market will continue to be instability. Moreover, even after elimination of coronavirus will remain an unresolved issue - how long will it take the market to recover, especially in the context of growing global financial instability.
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