A complete collapse in the oil market – a barrel price dropped to a single cent. Shock and hysteria in crude oil markets: The amount of surplus and the inability of oil companies to store such a large barrel has led to a collapse. Russia, Saudi Arabia and America are considering their steps. We have already opened this morning with a reassuring report that the price of a barrel of oil has reached a 21-year low, however at 1:30 New York, the price of oil now seems to be a single cent per barrel.
The reason for such a dramatic drop is the sharp drop in demand, aside from the limited ability of oil companies to store existing surplus quantities.
Already last month, one of Goldman Sachs’s top analysts announced that due to a halt in aviation oil demand, the oil giant’s storage capacity was expected to be short-lived, but it also did not foresee the extreme move that is taking place today and could lead to an extreme drop in gasoline prices at your pump. The decline in strain will last about a month, and will be felt especially in oil-rich countries like the US, Canada, and Russia.
Currently, surplus production has risen to 20 million barrels a day, which alone accounts for 20% of global daily consumption.
Which explains the dimensions of the crisis and the zero prices. The price of oil is expected to rise back quite quickly as, over the next two months, futures close around $ 20 a barrel. Meanwhile, Russia and Saudi Arabia, two of the three largest oil producers in the world, hint at a cut in production, when last night OPEC announced that daily production would be cut by 10%.
The effects of these unprecedented and historic fluctuations on stock markets are negative, however, giant companies shares such as Exxon Mobil Chevron, and British Petroleum and Royal Dachs, did not fall by more than 4% each, reflecting the current situation is definitely temporary.
At the same time, the US crude oil industry, the world’s No. 1 crude oil producer, has been in crisis for more than a month, standing squarely due to the inability to pay the US energy worker its wages at these prices.
Senior officials in the US government have already hinted that the federal government may have to intervene directly and buy oil from the companies themselves due to the situation in the private market, or alternatively pay them to stop production.