The outbreak of coronavirus global pandemic has disrupted all economic equations and is now putting unprecedented pressure on oil. In the current situation, West Texas Intermediate (WTI) oil turned negative for hours and reached even about -$40 per barrel.
However, the International Monetary Fund (IMF) predicted that the world’s economy will experience a -3 percent growth in 2020 caused by the coronavirus global pandemic.
But the sharp fall of oil on the global level registered an incredible and unbelievable record for US oil and such a price decline has been unprecedented since 1946.
According to Bloomberg, nullification of oil storage capacity of most buyers and producers of oil, at a time that demand for oil has hit the lowest record in at least a recent decade due to the coronavirus global pandemic as well as closure of a large portion of businesses, has been cited as one of the main reasons behind such unprecedented oil price decline.
Only in the United States, oil companies have reduced their extraction capacity by 13 percent in a week. For crude oil importers such as China, this oil shock will be a positive effect but this situation is more complicated for the United States.
In a press conference, US President Donald Trump pointed to the unprecedented oil price decline in the country and said, “this situation will definitely be short-lived and temporary.”
He hoped that demand and supply management of oil will be invigorated after the coronavirus global pandemic.
It seems that coronavirus and oil have formed an alliance against US President Donald Trump and in a limited time i.e. seven months left to US Presidential Election in 2020. In the United States and many other parts of the world, many are now watching the coalition, so that US President Trump may not be able to become US president again.
This is a summary of an article published by Aftab e Yazd daily in Persian today.
MNA/